3 Questions you need to ask anyone giving you financial advice:
- Are you legally obligated to act in my best interests at all times? If so, are you willing to put that in writing? Anyone who purports to uphold a fiduciary standard should be willing to stand behind that claim.
- Will you disclose all potential conflicts of interest? A fiduciary should be willing to disclose any relationship, compensation, incentive or other factor that potentially could interfere with his or her ability to act in your best interests. Even if you’re not interested in a fiduciary relationship, you should press your advisor to tell you about any potential conflicts so you can better evaluate his or her advice.
- In what ways are you compensated? Ask if the advisor receives commissions, referral fees or other financial incentives. Some advisors tout themselves as “fee-based,” but also accept other payments that could influence their recommendations.