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Fiduciaries Can Dispel Common Client Misconceptions

December 20, 2016

Clients say the darnedest things, but an advisor acting as a fiduciary should be able to steer them on to the correct path, Dan Carter writes on Newsmax.com.

People often say “dumb” things to their financial advisors, based on a slew of prejudices and bad information, according to Carter, an investment advisor representative for Safeguard Investment Advisory Group. But an advisor who puts clients’ interests first as dictated by the fiduciary standard will be able to dispel such mistaken beliefs, he writes.

Among the common client misconceptions Carter has seen is the idea that their plumber neighbor who’s done well for himself in the market is qualified to give financial advice, for example, he writes.

Another prejudice, says Carter, is against the insurance industry. Not all insurers are the same and everyone needs some insurance, Carter writes.

Many clients — 67% of Americans, according to Carter — falsely believe they pay no fees on their investments. But just because fees don’t show up on the brokerage statement doesn’t mean they’re not there. A fiduciary would explain them to a misinformed client.

A good advisor would also urge clients to use a certified public accountant to help with taxes instead of using TurboTax, according to Carter.

Some clients also need to understand that variable annuities aren’t guaranteed despite what their brokers may tell them, he writes. But annuities are a useful, if illiquid, investment vehicle if handled properly, according to Carter.

Finally, a good advisor, he says, would help clients plan for longevity rather than projected life expectancy.

By Alex Padalka
  • To read the Newsmax.com article cited in this story, click here.