Is your financial professional a FIDUCIARY? Here's what you should know...

You've probably heard the word "fiduciary" being thrown around at cocktail parties, but what's it really mean (also- go to better cocktail parties)?

Well, by definition a fiduciary is someone who is ethically and legally bound to act in another person's best interest. This is an important designation because not every financial professional has to live up to this highest of standards. For example, the typical broker-dealer operates under the less stringent standard of "suitability." Suitability is loosely defined as making recommendations that suit the best interests of their client. Basically, a broker needs to make sure the investment recommendation is "good enough," but because brokers are paid on commission, there can sometimes be a conflict of interest with recommending more expensive products or churning an account (buying and selling in excess). That's not to say brokers are bad- it's just something to be aware of, because many people naturally think that their financial professional MUST operate in their best interest at interest. That is not the case...unless they are a fiduciary. Investment advisors (like those at Compton Financial Group) are fiduciaries. This consists of the duty of loyalty and care. A fiduciary is obligated to act in your best interest at all times, and seeks the lowest costs possible for the best investment strategy available. No if's, and's, or buts! Know the difference and if you're unsure how to look out for your own best interest in personal finance- hire someone who will- a fiduciary.

 -Your Friends at Red Oak Financial Group