Saving for retirement can be one of the most significant investments that you will make in your lifetime.  You are putting your hard-earned dollars into a variety of savings vehicles, like 401(k) plans or Roth IRA’s, with the hope that your funds will continue to grow.  Many investors choose to hire a financial advisor to assist them with this process—anything from financial education and setting up an account to analyzing results and rebalancing portfolios.  However, a common misconception is that all advisors are alike; so, before you decide to move forward with an advisor, you will want to ensure that he or she is a fiduciary.

 

WHAT IS FIDUCIARY RESPONSIBILITY?

A fiduciary is a person who will only act in the best interest of their client (fiduciary beneficiary).  He or she is held to a higher standard and will provide high quality care. In addition, a fiduciary will disclose any conflicts of interest and will be transparent in all communication.  This fiduciary responsibility applies to the entirety of your relationship—whether it is one day or fifty years. As the beneficiary, you are trusting your advisor to act on your behalf, so it is crucial that you have a relationship built on this foundation.  You can have confidence that any recommendations made or advice given will be based only on your particular situation. 

 

WHY DOES IT MATTER?

While all financial advisors may be knowledgeable about retirement accounts, differentiating between a fiduciary and non-fiduciary advisor could be the difference in how your portfolio performs.  Non-fiduciary advisors are not necessarily required to make recommendations based on your best interest.  Instead, their advice is only required to be suitable for your financial situation, meaning that it may not necessarily be the best option for you (i.e. could be more expensive).  Though many employees trust that their company plan providers are offering good advice, surveys report that many are still concerned about their portfolios. According to Market Watch, one survey of 1,425 adults aged 25 and over with money in a 401(k) or 403(b) plan completed by AARP stated: “Seventy-eight percent of savers said they are “very concerned” or “somewhat concerned” that the advice they get through their workplace plan isn’t always required to be in their best interest.”[1] Because of conflicted investment advice, those saving for retirement lose an estimated $17 billion each year.[2] To avoid these losses, it is crucial that Americans continue to educate themselves about fiduciary duty so they are prepared to make more diligent decisions regarding their finances.  

WHAT SHOULD I LOOK FOR IN A FINANCIAL ADVISOR?

The first step in finding the right financial advisor is to determine what you need from the relationship.  If, for example, you are comfortable making your own investment decisions and only need help placing trades, it may not matter whether the advisor you choose is a fiduciary. However, if you are looking for someone to guide you through the retirement savings/investment process and make recommendations, finding a fiduciary will be more important. When you are interviewing potential advisors, ask if they follow the fiduciary standard.  If they do, they should be able to answer with a simple, “Yes.”  In addition, if an advisor offers his or her services to you for free, this could be a red flag that there may be hidden fees. Ultimately, the advisor you choose should be someone who you feel is the best match for your needs.  In addition to references provided by family and friends, Howard Capital Management, Inc. (HCM) can put you in touch with a trusted advisor in your area.  

INVEST WITH CONFIDENCE

Thanks to technological advancements, HCM has taken fiduciary responsibility to the next level by helping investors to become more informed and make investment decisions with more confidence. Online investment tools, such as HCM’s 401(k) Optimizer®, can offer personalized investment advice based on a computerized analysis of an individual’s retirement plan.  Using your risk tolerance and long-term goals, the system can recommend:

• Which specific funds to choose in the employer’s plan.
• How much to invest in each fund.
• When to rebalance the account.
• What to do with your investments when the markets rise or fall.

Together with your financial advisor, these tools can help you customize your portfolio as you work to optimize your investments and achieve a more secure financial future.  These recommendations will always be made with your best interest in mind.   Contact Howard Capital Management, Inc. At Howard Capital Management, Inc. (HCM), we understand how important it is to work with someone you trust, that can create and deliver tools and technology to help you navigate the market with ease.  By planning for your financial future now, you can make your retirement an exciting and smooth transition. [1] https://www.marketwatch.com/story/401k-investment-advice-can-you-trust-it-2013-09-10?page=2 [2]https://obamawhitehouse.archives.gov/sites/default/files/docs/cea_coi_report_final.pdf