Is your investment advisor independent?
Independent investment advisors and investment brokers/(financial advisors), both tailor advice to individuals, however, they are not governed by the same client relationship standards.
Financial advisors, brokers and agents who are employed by broker-dealers or large corporations may try to practice in a independent capacity, but their pay structure binds them to the contracts and sales production requirements of the companies they work for.
Is your investment advisor a fiduciary?
An independent investment adviser operates as a fiduciary, a capacity in which a client's interests come before their own. Registered Investment Advisors (RIA), who are governed by the Investment Advisers Act of 1940 or individual state investment advisors acts, are held to a true fiduciary standard.
If your investment advisor is not a fiduciary and independent of a "product producing" financial corporation, their recommendations may not be in your unequivocal best interest and are likely tied to commissioned compensation.
Does your advisor accept commissions?
If your advisor accepts commissions for trading transactions or sales of a mutual funds and annuity products, then the potential lies for their recommendation of that investment to be compromised. Sales commsioned financial transactions are related to revenue inflows for the company the advisor works for or represented in that transaction.
The Fee-Only Advisor offers the most transparent and objective advice available. This model minimizes conflicts and insures that your financial planner acts as a fiduciary.