Video instructions and help with filling out and completing What Form 5495 Fiduciary

Instructions and Help about What Form 5495 Fiduciary

Everyone bill that's been here for money evolution calm in today's video I'm gonna be helping you to answer the question what is a fiduciary more specifically I'm gonna be talking about some of the differences between a fiduciary and a financial adviser so this is something that's obviously been getting a lot of attention here over the last couple of years especially with the Department of Labor trying to create their definitions for a fiduciary standard so hopefully this video gives you some some great ammunition to ask some of the right questions as you're maybe exploring some options for yourself and for your portfolios so first of all let's talk about a definition here so I went out on the internet lots of different topics and information pertaining to this but one definition I found on the internet said that only fiduciary advisors are legally and ethically required to put your best interest before that of their own another analogy that I saw that it kind of made sense to a degree was imagine you're going out to buy a new suit with a financial advisor the salesman is only required to sell you a suit that fits whereas a fiduciary advisor is required to not only sell you a suit that fits but also that looks good on you so when you when you see those kinds of definitions and hear that analogy then it might become very clear that you need to find a fiduciary financial advisor one of the reasons that the fiduciary has been getting a lot of attention here is what we're trying to do I think what the industry is trying to do hopefully is to eliminate or at least reduce as many of the potential conflicts of interest that might exist out there one of those primary conflicts of interest pertains to Commission's you know and the idea there behind that is that if advisor is getting paid a commission to recommend a product or to sell you a product that they may be doing that more for their own best interest for them getting the Commission as opposed to doing what is actually right for yourself and your portfolio so one of the reasons that that I kind of take some maybe a little bit of disagreement with that that whole premise there is again to go back to that suit analogy so where you buy your suit or where you go shopping for your suit may have a very big difference on what you end up walking out of that store with you know so for example if you go to to once to they may be fiduciaries they may sell you the suit that looks best on you that they have available in that store but they may have a very limited inventory they may not sell all of the brands you may go into another store maybe a very high-end store and they could sell you a suit that looks absolutely phenomenal on you but that suit might cost $5,000 and you really went in looking for a suit that was maybe in the $500 range you know so even though that looks the best on you there still are some differences with that and we see those kinds of differences with the financial world as well because what we've experienced is that even though some of these fiduciary advisors may not have an incentive to sell different products they may in a lot of cases be dealing with a smaller investment pool so there's certain investments that are only basically offered as a commission based product some of those are insurance products that may not be appropriate for you but they may be appropriate for somebody else things like annuities which may be fit into a lot of our clients portfolios and things like that you may be missing out on some of that advice because that particular financial advisor just simply doesn't have those those options available a lot of firms too will have portfolios that are managed primarily by their own firms so again you're dealing with that smaller investment pool another area here too is fees you know so the idea with a fiduciary is that your chart you're being charged a fee for the management of the portfolio it doesn't matter what investments they're putting into that however the fee can vary widely for essentially the same thing from one firm to another so you may have one firm that's charging one percent another firm could be charging one and a half or two percent and essentially you're getting exactly the same thing so again not saying that there's a conflict of interest with that but again it's something to be aware of as you're exploring this fiduciary option here the other thing too where there are potentially some conflicts of interest and again we're charging a fee or the fiduciary advisor is charging a fee for managing a portfolio and let's say you just inherited $200,000 and you go to your financial advisor and say what do you think I should do with this I'm thinking about maybe paying my house off or I'm thinking about maybe investing that what should I do you hope that that financial adviser is gonna help you make the best decision that's based on your individual situation but again even though there's not a commission involved there is a financial incentive for that financial adviser to tell you to bring that money to their firm so they can make fees off of that portfolio and and so ultimately I think whether you're hiring a fiduciary or you're working with a financial advisor it's still ultimately gonna come down to who you're working with you know and you want to first and foremost find somebody that is going to be compatible with you somebody that you believe is trustworthy and honest that it has a