Long time ago, I got into a “heated” discussion about how to choose a financial planner. When the word “fiduciary” came up, and someone asked my opinion about it… I gave them my heretical opinion:
The fiduciary standard is nothing more than a clever marketing gimmick and… financial planners who hang their hats on The Fiduciary Standard™ are virtue signaling.
Everyone has opinions. Everyone has bias.
Even me (if you coulnd’t tell).
And… even fiduciaries.
An unbiased opinion is really a “polite” way of saying that an individual has no skin in the game. They aren’t invested in the outcome of their clients in any serious way.
Put another way, people who are “unbiased” or “fee only” financial planners don’t stand to lose money if their client or customer loses money.
This is why I find the chest-thumping financial planners who virtue signal “fiduciary!” so amusing.
Want to test you financial planner’s loyalty and objectivity? Ask if he or she has “skin in the game.” In other words, does he or she follow the same advice they’re giving you? Do they do the Indiana Jones thing and dive into the snake pit before sending you down in to battle your own financial foes? Ask him or her what happens to them if you lose money or the plan doesn’t work out as expected. An objective financial plan means your financial planner is motivated to make a reality-based plan that produces for-real results… not hypothetical ones. If your financial plan fails, or you lose money, does your advisor still make money? Are their commissions clawed back? Do they have to write you a refund check for the fees you paid them? Do they refund you their financial planning fee?
If they have no skin in the game, if they ask you to go first on an untested financial strategy that they themselves don’t use, or if they can still make money while you lose money, then that’s a fantasy fiduciary where your best interests — in reality — are on the chopping block.