Q: I hired a financial advisor, but some of the products they are recommending strike me as odd. How can I be sure my advisor is really looking out for me, and not just trying to pocket as much commission as possible?
There's no way to know with 100% certainty whether an investment advisor truly has your best interests in mind. I certainly can't vouch for every investment professional with certain credentials or registrations.
Having said that, one quick check is to determine whether your investment advisor is a fiduciary or not. Someone bound to a fiduciary duty is required to put their client's best interest ahead of their own desire to make a profit. For example, a fiduciary wouldn't sell a high-fee, high-commission mutual fund to a client when a lower-commission version of the same fund is available. In fact, most fiduciaries don't earn commissions at all and choose to work on a fee-only basis. Fiduciaries are also required to disclose any potential conflicts of interest to their clients.
Registered investment advisors (RIAs) and their representatives are bound to a fiduciary standard as part of the Investment Advisors Act of 1940. And, certain designations, such as Certified Financial Planner (CFP), require their users to be fiduciaries.
On the other hand, brokers and certain other professionals who often use the title "advisor" are not fiduciaries and are merely bound to the much-looser suitability standard. This simply means that the products they recommend need to be appropriate for the client -- not necessarily the lowest-cost and best-fitting options.
So a good place to start is to ask your advisor if they are a fiduciary. If so, you can be reasonably confident that they are making recommendations in your best interests, not to boost their own income.
