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Learn why high-net-worth families benefit from working with a fiduciary advisor who prioritizes their interests, handles complex financial situations, and maintains transparency throughout the advisory relationship.
Why High-Net-Worth Families Should Work with a Fiduciary Advisor
High-net-worth families often face unique and complex financial situations that require specialized expertise and guidance. Whether wealth was acquired through a corporate executive position, business sale, or multigenerational inheritance, these circumstances bring challenges that may potentially benefit from working with an advisor who places the client's interests first.
Why the Fiduciary Standard Makes a Difference
Let me take a deeper dive into what being a fiduciary actually means, as it's a term that's frequently misunderstood. In our industry, there are two primary standards of care: the suitability standard and the fiduciary standard.
Some financial professionals operate under the suitability standard, which simply means that based on your age, experience with investments, and net worth, a particular recommendation should be "suitable" for you. However, suitability is very different from asking whether a recommendation is in your best interest within the context of your entire financial picture.
As a fiduciary, I'm held to a higher standard that includes both a duty of care and a duty of loyalty. The duty of care requires that I act with the care, skill, prudence, and diligence of a prudent professional in light of the client's goals, risk tolerance, objectives, and personal circumstances. The duty of loyalty means I must put my clients' interests above my own and above the interests of my firm.
A Consultative Approach vs. Product-Centric
The fiduciary relationship is fundamentally consultative rather than transactional. When working with high-net-worth families, this approach becomes particularly valuable due to the complexity of their financial situations.
Instead of focusing on selling financial products, a fiduciary advisor seeks to understand all the moving parts of your financial life. We want to know how each recommendation integrates with everything else you're doing financially. This holistic perspective helps keep any strategy we implement working in harmony with your overall wealth management plan.
This differs significantly from interactions with professionals whose primary objective may be product sales. Rather than promoting the "latest and greatest widget" regardless of your needs, a fiduciary first asks whether you need it at all, and then evaluates how it fits into your overall financial world.
Potential Conflicts of Interest
Everyone in the financial industry has potential conflicts of interest - the simple fact that advisors are paid for their services could technically be considered a conflict. The important distinction lies in how these conflicts are handled.
As a fiduciary, I'm obligated to disclose any material conflicts of interest. For example, if I were to refer a client to a law firm where my brother-in-law works (even if he's highly qualified for the specific need), I must disclose that relationship. This transparency allows my clients to make fully informed decisions.
Additionally, circumstances change over time. A relationship that had no conflicts initially may develop conflicts due to changing affiliations or relationships. Fiduciaries have an ongoing responsibility to monitor and disclose any new conflicts that arise, maintaining transparency throughout the advisory relationship.
How to Verify You're Working with a Fiduciary
Many professionals in the financial services industry blur the lines, and clients often assume their advisor is acting in their best interest when this may not be the case. To verify whether someone is actually a fiduciary, consider taking these steps:
- Ask directly: "Are you a fiduciary?" Don't hesitate to be straightforward.
- Check their registration: Investment advisor representatives have a requirement to fulfill fiduciary duties.
- Use the SEC's website: Visit https://adviserinfo.sec.gov/ to look up any financial professional. This resource will show if they're registered with the Securities and Exchange Commission and if they're affiliated with a registered investment advisor.
Why High-Net-Worth Families May Benefit from a Fiduciary Relationship
High-net-worth families should consider working with a fiduciary advisor for several reasons:
- Complexity management: Fiduciaries are equipped to handle the multifaceted aspects of significant wealth, from tax implications to estate planning.
- Client-centered approach: Your interests come first, not product sales or company quotas.
- Comprehensive perspective: Recommendations are made in the context of your entire financial picture, not in isolation.
- Transparency: Conflicts of interest must be disclosed, creating a more open advisory relationship.
- Integration of services: Fiduciaries typically coordinate with other professionals (attorneys, CPAs) to achieve cohesive wealth management.
- Long-term relationship: The focus is on building an ongoing partnership rather than completing transactions.
Working with a fiduciary creates a fundamentally different experience. The relationship isn't adversarial but collaborative - you're working with someone who is legally obligated to prioritize your interests. This approach is especially valuable for high-net-worth families where the stakes and complexity of financial decisions are heightened.
By confirming your advisor’s fiduciary status and understanding the level of care that comes with it, you can be more confident that your wealth is managed with the attention, expertise, and loyalty it deserves.
Contact an EP Wealth advisor today to learn more about our fiduciary services.
DISCLOSURES:
- EP Wealth Advisors, LLC. is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the advisor has attained a particular level of skill or ability.
- Request an appointment with an EP Wealth Advisor when you have a minimum of $500,000 in investable assets – which includes qualified retirement plans (IRA, Roth IRA, 401(k), taxable brokerage, cash (savings / checking) and CDs. Investable assets do not include your home, vehicles, or collectibles.
- Hiring a qualified fiduciary advisor and/or financial planner does not guarantee investment success, and does not ensure that a client or prospective client will experience a higher level of performance or results. No guaranty or warranty is made that any direct or implied results or projections being represented here will be met or sustained.
- The need for a financial advisor or financial planner and/or the type of services required are specific to the uniqueness of each individual’s circumstances. There is no guarantee or warrantee that the services offered by EP Wealth Advisors, LLC will satisfy your specific financial services requirements. Services offered by other advisors may align more to your specific needs.
- Information presented is general in nature and should not be viewed as a comprehensive analysis of the topics discussed. It is intended to serve as a tool containing general information that should assist you in the development of subsequent discussions. Content does not involve the rendering of personalized investment advice nor is it intended to supplement professional individualized advice.
- EP Wealth Advisors (“EPWA”) makes no representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information presented. All expressions of option are subject to change without notice.
- All investment strategies have the potential for profit or loss. Different types of investments and investment strategies involve varying degrees of risk, and there can be no assurance that any specific investment strategy will be suitable or profitable for a client’s portfolio. The risk of loss can never be eliminated even if working with a professional.
