Financial advisors, robo-advisors and fiduciaries: how to get help and what to ask

Human advisor, robo-advisor, or do it yourself

• Human advisor: personalised planning, behavioural coaching and tax or estate help, for a fee.
• Robo-advisor: software that builds and rebalances a diversified portfolio from a questionnaire, usually at a lower cost.
• Self-directed: you decide, using funds, tools and research. Lowest cost, highest demand on your time and discipline.

What fiduciary means

A fiduciary has a legal duty to act in your best interest. In the US, registered investment advisers have a fiduciary duty; some brokers are held to a different standard of acting in your best interest at the time of a recommendation. Ask any adviser directly: “Are you a fiduciary at all times, for all my accounts?” and get the answer in writing.

How advisers are paid

• Fee-only: paid by you, not by product commissions.
• Commission-based: paid when you buy certain products, which can create a conflict.
• Assets-under-management: a percentage of your portfolio each year. Over decades, 1% a year is a large number.
• Flat or hourly: a fixed price for a plan.

Checking them out

• Search the SEC’s adviser database and FINRA BrokerCheck.
• Read the firm’s disclosure document (Form ADV).
• Ask for the total cost in dollars per year.

Tools and AI

Software, including AI assistants, can explain concepts and organise your data, but none replaces personalised, regulated advice, and none owes you a fiduciary duty. Use them to prepare better questions.

FolioTrend is research and education, not an adviser. We never recommend what you should buy or sell.