What It Means to Be a Fiduciary Advisor

I created PharmD Financial Planning to serve clients at a true fiduciary standard of care. What does that mean?

First, a true fiduciary advisor is legally obligated to always prioritize their client's interests above their own. This means acting in good faith, disclosing all relevant information about fees and investments, and avoiding conflicts of interest.

Isn't Every Advisor a Fiduciary?

Almost all financial advisors claim to be fiduciaries. It's now used often as a marketing slogan. However, only a small percentage are, 100% of the time. The Financial Industry Regulatory Authority (FINRA) has indicated that approximately 12% of advisors registered with the securities industry are registered exclusively as Investment Advisor Representatives (IARs), which requires them to be fiduciaries on all accounts. A significant portion of financial advisors are dually registered. They can act as an IAR AND as broker-dealer agents, which have no required fiduciary standards.

PharmD Financial Planning is a true fiduciary through and through. There is no affiliation with a broker-dealer. It's fiduciary care always, not just when it's convenient.

Who Else Stands to Gain Financially from Our Relationship?

PharmD Financial Planning has no affiliation with a Broker/Dealer, investment company, or insurance corporation. Often, a financial advisor's duty of care and loyalty is to their broker-dealer. Those broker-dealers also stand to gain financially from the advisor-client relationship. This can create a lot of conflict of interest. Who's looking out for who in that scenario? At PharmD Financial Planning, the duty of care and loyalty is always 100% to my clients. It's the best structure to provide unbiased and unconflicted advice and guidance.

What Does Flat Fee Mean and Why Should You Care?

How you pay a financial advisor matters. Many advisors charge a percentage fee based on the value of the investment accounts they manage. For example, a 1% fee on a $1,000,000 portfolio is $10,000 annually. As that investment account increases in value, so does the fee. Over time, that 1% fee can significantly reduce the portfolios long-term value due to compounding effects. To make matters worse, many clients don't see additional value, services, or benefits for that ever-increasing fee. Why continuously pay more while getting nothing extra in return?

At PharmD Financial Planning, I charge a single flat fee of $6,500/year. As your investment portfolios go up, my fee remains the same. My compensation is not tied to the value of your portfolio or the decisions you make regarding your money. This reduces inherent conflict of interest issues.

Look at the cost comparison between a flat fee advisor and a 1% asset advisor over 20 years. Assuming a 7% annual return, a 1% asset advisor will collect $775,335 in fees from a $2,000,000 portfolio. Over that same 20-year period, PharmD Financial Planning would collect $130,000 in fees. That's $645,335 in cost savings or about 32% of your starting portfolio balance!

Finally, let's look at other professional service providers. Let's take CPAs, for example. If they prepare your taxes and get you a tax refund, are they entitled to a portion of that refund? Of course not. So why do people pay financial advisors a portion of their long-term investment gains? 

"You Are How You're Paid"

Incentives drive advice. It's the way it's always been and will always be.  At a conscious or subconscious level, the incentive of how a financial advisor is paid will influence their advice, especially if they are tasked with sharing that revenue with a broker-dealer, insurance company, investment company, or bank that employs them. At PharmD Financial Planning, I charge a flat $6,500/year fee for all services. My incentive is to keep my clients happy, so they remain with the firm for a long time. To do that, I need to provide world-class advice and guidance to help my clients accomplish their goals year after year.

Conclusion

PharmD Financial Planning was not started to sell annuities, sell insurance products, or overcomplicate investment portfolios. It was created to provide financial advice and guidance at a fiduciary level of care in exchange for a single, flat, and transparent fee. If you want to learn more, I invite you to schedule a free consultation HERE. Until then, happy planning!

- Derek J Delaney CFP, ChFC, E.A.