The Pax Financial Blog

What’s a Fiduciary and Why Do You Need One in 2021?

Financial Planning, financial advisor San Antonio Dec 16th, 2020 by: Darryl Lyons

There were a lot of tough lessons learned in 2020, as the Coronavirus pandemic crippled many people financially with layoffs, shutdowns and dramatic shifts in the market. After a rollercoaster year, many investors have committed to getting help with their finances in 2021 – a trend I’m pleased to see. But before you learn another tough lesson, there’s one important question you should ask before hiring a financial advisor to work with:

Are you a fiduciary?

Get the answer in writing!

Any potential advisor should be honest and willing to talk about their service model and how they’re compensated. The answers will explain where their loyalty lies. If a financial advisor dodges questions about their fees or services, gives convoluted answers that confuse you more, or makes you feel you don’t have a right to ask questions, take it as a red flag.

If you’re just starting your search for a financial advisor, or you have decided to make a change in the new year, make sure you understand the differences between fiduciaries and non-fiduciaries.

 

What is a Fiduciary?

A fiduciary financial advisor is legally and ethically obligated to put his or her clients’ best interests first, even if it means making decisions that are contrary to the advisor’s own best interests. This means that the advisor will recommend a product because it’s in the best interest of the client; not because of a hefty commission, a company quota or another reason that could benefit the advisor over the client.

A fiduciary financial advisor has an ethical and legal duty to care and is bound by law to act in good faith and in the highest trust. A fiduciary must clearly explain their service model and the fees they charge.

 

PAX Financial Group follows a fiduciary standard. For more on what this looks like, schedule a no-obligation conversation with our team to see how we can help.

 

There Is No Minimum Requirement

When you go to the doctor, you can safely assume that your practitioner passed the required education needed to practice medicine, completed the required residency needed to work in the field and has the experience one gets through completing the above requirements. But, believe it or not, you can’t make that assumption with financial advisors. Because there is no minimum requirement!

This is unfortunate because advisors can impact your financial well-being just like doctors can impact your physical well-being. The wrong financial advisor can affect your financial security late in life when you need it the most. So, do your homework. Ask about an advisor’s experience, credentials and fiduciary status.

 

Warning Signs

If you’re starting your search for a financial advisor for the first time or looking to replace your current advisor, be aware of these other red flags:

  • You must act fast! High pressure or using fear to get you to make a quick decision is a sales tactic. If a financial advisor is using high pressure sales, he or she may not have your best interest at heart.
  • Guarantees. Timing the market is nearly impossible, so be wary of any financial advisor who claims to have the secret to guaranteed success.
  • One-size-fits-all solutions. Investing and financial planning is not the same for everyone. We all have different goals, situations and concerns. Make sure a financial advisor you choose to work with understands yours.

 

Another Movement in Investing

Another movement I’m pleased to see gaining momentum right now is value-based investing. More and more investors are understanding the power they have with their investments and want to put it to good use by investing in companies that align with their beliefs. Whether that’s a social cause, such as animal rights or clean energy, or a religious belief, a financial advisor can now help you choose investments that you can feel good about.

When you take this kind of stance in your portfolio, doesn’t it make sense that your financial advisor should practice the highest standards as well? The highest standard in the financial services industry is the fiduciary standard. While you focus on investments you care about, make sure your financial advisor cares about you!

 

How PAX Financial Group Can Help

At PAX Financial Group, our financial advisors are paid on salaries, so there’s no incentive to give you anything but advice tailored to your needs. We’re also fiduciaries in San Antonio, TX, so we’re legally required to continue putting our clients’ interests first. For more on what this looks like or how we can help, contact us, and get the conversation started.

For more on the Coronavirus and lessons we learned in 2020, read our collection of posts related to the pandemic here.

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This material is provided by PAX Financial Group, LLC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information herein has been derived from sources believed to be accurate. Please note: Investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results.

 

Darryl Lyons

Darryl Lyons

CEO and co-founder of the PAX Financial Group, Darryl Lyons has been a licensed professional in the financial services industry since 1999. A lifelong Texan, Darryl began his career in the financial sector just one day removed from earning his bachelor’s degree in corporate financial management and accounting at St. Mary’s University. Throughout his career, he has won awards for recruiting and development from Fortune 100 companies. In January 2007, he chose to begin and develop his independent practice. He joined Andres Gutierrez and Joseph Schuetze to form the PAX Financial Group. Darryl also served as the Chairman for Brooks Development Authority. Shortly after his service, Mayor Julian Castro, named a park “The Darryl W Lyons Park” in honor of his service. He was named to the 2010 San Antonio Business Journal’s “40 Under 40 Rising Stars,” which honors people making a difference in business and in the community.

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