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Asset Preservation Advisors


State: GA

APA’s philosophy is to work closely with our clients to develop an in-depth understanding of their unique needs and objectives. We then customize a municipal bond portfolio that best meets their specific goals and needs. APA manages high quality municipal bond portfolios in four strategies: Short-Term, Intermediate-Term, High Income, and Taxable.

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Fiduciary or Not a Fiduciary? That is the Question for Affluent Investors

At least eight-in-ten of Affluent investors do believe that their financial advisor is a fiduciary. And what does that mean to them?

| BY Donald Liebenson

What is a fiduciary? Does the relationship involve a legal or ethical relationship; one involving the care of assets, and/or one in which a professional is looking out for their client’s best interest? According to a Spectrem Group whitepaper, affluent investors regardless of wealth level give varying definitions of what is included in a fiduciary relationship.

Fiduciary—Do Investors Know What It Means?  indicates a majority of affluent investors feel they know what a fiduciary is. Confidence in their perceived knowledge increases with wealth level. Nearly six-in-ten (57 percent) of non-Millionaire investors with a net worth of at least $100,000 (not including primary residence) state they know what a fiduciary is, compared with 75 percent of Millionaires and 89 percent of Ultra High Net Worth households with a net worth between $5 million and $25 million.

At least eight-in-ten of Affluent investors regardless of wealth level do believe that their financial advisor is a fiduciary. And what does that mean to them?

At least seven-in-ten non-Millionaires (74 percent), Millionaires (76 percent) and UHNW households (83 percent state that it is a legal or ethical relationship. Near –equal percentages of these households perceive the fiduciary relationship to be one that involves the care of assets.

At least half believe a fiduciary relationship is one in which a professional is looking for their client’s best interest. This definition is embraced especially in the wealthiest households (67 percent of UHNW respondents compared with 54 percent of non-Millionaires).

Roughly half of Affluent investors believe a fiduciary relationship is one based on confidence, good faith and trust. Just under one-fourth state it is one of extreme loyalty.

Whatever they believe a fiduciary to be, Spectrem research finds that six-in-ten affluent investors feel that the primary benefit of working with a financial advisor is that it will improve their investment returns. This indicates a general confidence that a financial advisor is working in their best interests.

Generally speaking, a fiduciary relationship states that a financial advisor acts always in the best interest of the client and are required to disclose any potential conflicts of interest.  Registered investment advisers operate under this standard. Stockbrokers, however, are only required to adhere to a “suitability” standard, meaning that an investment is deemed suitable and appropriate for the client. The former must disclose costs or commissions, and must chose the lowest for the client. The latter does not, and indeed, as financial columnist Terry Savage has reported, are often incented to sell “suitable” products with higher and/or hidden fees.

Indeed, at least four-in-ten Affluent investors regardless of wealth level do state that financial advisors are more concerned with selling products than helping clients.

It is incumbent on investors to ask their advisors about the fiduciary standard and what they can expect from them. And advisors would do well to be clear and open with their response. Spectrem Group wealth level studies consistently find honesty and transparency are the primary criteria by which investors choose an advisor.

About the Author

Donald Liebenson

Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.  

A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.