Welcome to part two of our blog series about what to look for in a financial advisor! In this post, we’ll focus on the ethics of financial advisors — it’s important to know their reputation, how they choose to be paid, and whether or not they’re registered as a fiduciary.

What is Their Reputation?

Would you eat at a local fast food restaurant if the only testimonials you could find about them complain about poorly cooked meat and terrible service? A company’s reputation means something, and barring exceptional circumstances, it’s usually earned, for better or for worse.

This couldn’t be more important than with financial planning. If you go eat a bad burger, you’ll be out of $6 and a good meal. If you go to a bad financial advisor, you could be putting thousands of your own dollars and your entire future at risk. So if a wealth management company has a poor reputation, do you really want to take a chance on them?

Research is important here. You don’t want to solely take the word of online reviews, as these aren’t always an accurate reflection of a company’s integrity and quality. You’ll want to ask people who have experience dealing with them. If you have friends or relatives who have worked with the financial advisor in question, get their opinion.

What About Mark Kennedy?

There are also definitive permanent resources which can be a good demonstration of your advisor’s character. Take Mark Kennedy, for example, the founder and president of our wealth management firm. Mark has interviewed with the following outlets:

  • Fox Business Channel
  • ABC Television
  • CBS Radio
  • Smart Money Magazine
  • BankRate.Com
  • Los Angeles Times

Don’t take our word for it — you can see Mark in the Media yourself! With any prospective financial planner, it’s of paramount importance that they run a trustworthy financial firm which has cultivated a positive reputation over the years.

Are They a Registered Investment Advisor (Fiduciary)?

While we don’t want to bog you down too much with financial jargon, it’s of utmost importance to know whether or not your potential wealth management professional is a Registered Investment Advisor, or “fiduciary.”

What is a fiduciary? The easiest way to explain it is simply to say that a fiduciary is bound by law to do what is right for the client instead of what’s merely “suitable.” In other words, a fiduciary is legally obligated to have the client’s best interests in mind when helping them with finances.

Any wealth management professional needs to be paid somehow, and this is usually in the form of a flat fee or a commission that’s proportionally based off investments they help you make. A fiduciary agreement ensures that the financial advisor can’t put their own needs ahead of your own, by recommending investments that pay them more than you.

Here are some things that a fiduciary is bound to do:

  • Making financial decisions and recommendations in good faith with no ulterior motives
  • Being completely transparent and providing relevant facts and data
  • Avoiding conflicts of interest of any kind
  • Not using the client’s assets for personal gain

If you’re looking for a reliable and trustworthy team of financial advisors in California, you’re in luck — Kennedy Wealth Management is a registered fiduciary, meaning Mark Kennedy and his team of wealth management professionals will always put your needs first.

How Do They Get Paid?

If you’re looking for a financial advisor and they seem to have a solid reputation, stellar certifications, and qualified experience, you’re on a good track. But the next thing you want to take a look at is their pay structure.

With each type of pay structures, there are pros and cons, and there are also ways that a predatory advisor could potentially exploit you. Here’s what you need to know about the most common pay structures for finance professionals:

  • Flat Fees: The advantage of a flat fee is that financial advisors aren’t incentivized to push certain types of investments over the other since they might make more on a commission model. All things are equal in a flat fee system. This is advantageous to you because it incentivizes them to be objective in their financial advisement. On the other hand, disingenuous wealth management firms could charge a much higher price than their actual services are worth. You’ll want to do your research to avoid being gouged.
  • Assets Under Management Fee: Some financial planning firms charge a flat percentage of the assets being managed for you. The upside to this is that the firm’s income is proportional to your own — the greater your assets are, the greater the payout is, which is a good reason for the finance professionals to seek your best needs. However, there are exceptions to this rule, which is why the aforementioned fiduciary duty is so important to look for. A firm without fiduciary duty could potentially put their own needs ahead of your own in a percentage-based model.
  • Hourly Fee: An hourly fee is exactly what it sounds like — the financial advisor charges by the hour. This may be good for smaller jobs which won’t require long-term treatment, but it can also be a recipe for a predatory advisor to abuse the system by “running out the clock,” taking more time to handle your case than is necessary.

How Does Kennedy Financial Get Paid?

Because we are a registered IRA (fiduciary) we are legally obligated to put your needs in front of our own, so we can guarantee that we have always had our clients’ prosperity in mind when designing our pay system.

For comprehensive plans, our wealth management firm charges a flat fee based on the complexity of the work. If you’re interested in access to our institutional wealth management team, we charge a percentage of the value of the assets we’re managing. In any cases where annuities, life insurance, or long-term care solutions are involved, we’re paid by the underwriting companies.

Ethical Financial Advisors You Can Trust

If you’re in need of ethical financial advisors who truly have your best needs in mind, you need not look further than Mark Kennedy and his team. At Kennedy Wealth Management, we always put our clients’ needs first, with no exceptions. Contact us today for amazing financial advisor services and retirement income planning help! And, of course, keep an eye out for part three of this blog series, where we will discuss the various emphases that financial advisors may or may not focus on.