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Fiduciary Advisor vs. Broker: What Sets Them Apart?

Have you ever wondered about the key differences between a fee-only fiduciary investment advisor and a broker? Let's break it down in an easy-to-understand way.


Imagine having a financial friend who's always looking out for your best interests. That's what a fee-only fiduciary investment advisor does – they prioritize you above all else. This concept is known as a "fiduciary duty," and there's no confusion here – it means your financial professional is bound by law to act in your absolute best interest.


Now, let's consider brokers. They might offer various financial products, but these products may not always be the perfect fit for your unique needs. A top-notch broker could introduce you to a product that seems suitable and appealing – and it might actually be a good option. However, other factors, like the broker's sales incentives, could influence the recommendation, preventing it from being the absolute best choice for you.


Picture a broker as a financial advisor who's connected with a broker/dealer or an insurance firm, or sometimes even both. They earn their keep through commissions or fees when they sell products to their clients. Some of those big financial names you've heard of, like Merrill Lynch, Edward Jones, and Morgan Stanley, fall into this category. In fact, about 89% of all financial advisors in the U.S. are brokers.


Now, here's a simple trick to differentiate between the two: Just ask them directly if they're a fee-only fiduciary investment advisor. But watch out for tricky word games! Sometimes, you might hear "Oh yes, my firm is a fiduciary." That's not the question you're after. You want to know if they are a fiduciary.


Another thing to be cautious about is the term "dual registered advisors." It can sound like double talk, making things confusing. If you spot "broker-dealer" on their business card, website, or any paperwork (which they're required to have), chances are they're probably not a fiduciary.


Being a fiduciary is like holding the gold standard of professionalism, and it's worth noting that only around 11% of advisors have this esteemed designation. Guess what? EPL Investment Advisory proudly holds the fiduciary title.


If you have any questions or wish to schedule a call with Peter Ellefson, a fee-only fiduciary investment advisor, please email me at peter@eplfs.com. Rest assured, I am dedicated to providing fee only fiduciary advisory services.




Disclaimer: Laws and regulations are subject to change, and readers are advised to consult EPL advisors for personalized advice and compliance with specific state requirements. This information is not specific advice and is meant for general education.

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