Fiduciary Financial Advisor in Houston, TX
Sometime in the next few years, you’ll likely sign a form that’s hard to take back, like a 401(k) rollover or a pension election, and it will shape your retirement plan for decades. Before you sign, you want to know whose interests the person recommending it is serving.
You’ve probably seen “fiduciary financial advisor” on more than a few Houston firms’ websites. The title matters, but many advisors (ours included) work under more than one standard depending on the account. So a good question to ask is a specific one: which standard applies to this account, and to this recommendation?
- Build reliable income
- Simplify complex decisions
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What Is a Fiduciary Financial Advisor?
A fiduciary financial advisor is legally required to put your interests ahead of their own when advising you. For investment advisors, that duty is rooted in a federal law, the Investment Advisers Act of 1940, and covers the whole advisory relationship.
The Securities and Exchange Commission (SEC) describes the duty in two parts:
- Duty of care: Your advisor has to understand your goals and how much risk you can live with, then give advice that fits, including as your life changes during ongoing investment management.
- Duty of loyalty: Your advisor can’t put their interests (or their firm’s) ahead of yours, and has to disclose conflicts, such as being paid more for one recommendation than another.
Why Does the Standard Matter for Houston Retirement Decisions?
For many pre-retirees, the largest financial recommendations of their lives are made close together, usually around an employer retirement plan. Knowing which standard covers each one tells you what you’re relying on when you act.
Most of our clients are within a few years of retirement, and a large share came from the energy industry, so we see these decisions often across the Energy Corridor. Plans at BP, Chevron, ExxonMobil, Shell, ConocoPhillips, and Phillips 66 often include features a standard 401(k) doesn’t have.
Take an illustrative couple in their early 60s: one spouse is retiring from an energy company with a 401(k) that holds a large block of company stock and a pension that offers a lump sum. A recommendation to roll the whole 401(k) into an IRA sounds simple, but it would give up a tax option on that company stock. And whichever pension option they choose will decide what the surviving spouse receives.
Company stock and net unrealized appreciation
Choosing a pension lump sum or monthly income
Rolling a 401(k) into an IRA
The years of withdrawals that follow
Once you retire, your accounts become your retirement paycheck, and each year brings decisions about how much to draw and from where. A plan that suited you at 62 may need adjusting at 70. In our Dynamic A.G.E. Approach, that’s the “A”: reviewing and adapting your plan as your life changes.
In each of these decisions, find out which standard covers the advice, and ask one more thing: does the person advising you earn more if you say yes? An advisor paid on assets earns more when a rollover moves into an account they manage, and a broker earns commissions on what you buy. That’s true under either standard, which is why both require those conflicts to be disclosed.
What Does the Fiduciary Standard Require?
Day to day, the fiduciary standard requires an advisor to recommend what fits your situation after weighing the alternatives, and to tell you about any conflict that could influence that advice. Because the relationship is ongoing, it also includes monitoring your accounts as your circumstances change.
When you sit down with a fiduciary advisor, you should see them:
- Put your needs before theirs, including when another recommendation would pay them more
- Understand your goals and how a recommendation fits your broader financial plan
- Explain why the option they recommend suits you
- Keep monitoring your accounts within the scope you’ve agreed to
Fiduciary Standard vs. Best Interest Standard: How Do They Compare?
The fiduciary standard governs advice from an investment advisor, and the best-interest standard applies when a broker recommends an investment. Both require advice in your best interest. They differ in two ways: a fiduciary relationship is ongoing, while the best interest standard applies at the moment of a recommendation, and the two are usually paid differently.
Since June 30, 2020, the SEC’s Regulation Best Interest (or Reg BI) has required brokers to act in your best interest whenever they recommend an investment or strategy.
What both standards share
Where they differ
- Ongoing advice or advice at the time of a transaction: A fiduciary relationship continues, and the advisor monitors your account so recommendations stay appropriate. Under the best-interest standard, ongoing monitoring isn’t included unless the broker agrees to provide it.
- How you pay: With an advisory account, you usually pay an ongoing fee based on the assets managed. With a brokerage account, you usually pay a commission when you buy or sell.
They’re two standards built for different situations, so learn which one covers each account. Ask about it first when you compare financial advisors in Houston, along with our other questions to ask a financial advisor.
When Do Our Advisors Act As Fiduciaries?
Our advisors are qualified to act as fiduciaries, and the standard that applies depends on your account:
- If we manage your investments or give you financial planning advice, we act as fiduciaries.
- If you have a brokerage account with us and we recommend an investment, we’re required to act in your best interest at the time of that recommendation.
Our advisory services are offered through Sanctuary Advisors, LLC, and brokerage services through Sanctuary Securities, Inc., which is why both standards apply. Many households have both kinds of accounts.
Our team, led by founder Robert G. Gilliland, CRPC®, brings over 60 years of experience. If you’re unsure which standard covers an account you have now or plan to open, ask us and we’ll answer account by account. That conversation is the first step of our three-step process, at our Memorial Drive office or by video.
How Can You Confirm Which Standard Applies to Your Accounts?
You can confirm which standard applies by reading a firm’s relationship summary, called Form CRS, and by asking any advisor, us included, to state in writing which standard covers each account. A good answer is specific: this account is advisory and covered by the fiduciary standard, and that one is brokerage and covered by the best-interest standard.
If you’ve worked with the same advisor for years, it’s still a fair, routine question, and a capable advisor will answer it without hesitating.
- Read the firm’s Form CRS, a short, plain-English summary of its services, fees, conflicts of interest, legal standard of conduct, and disciplinary history. Brokers and investment advisors must give it to individual investors.
- Read the advisor’s Form ADV Part 2A, a longer brochure with more detail on fees and conflicts.
- Find ours on the Sanctuary disclosures page, where both documents are posted.
- Look up any firm or professional on Investor.gov, the SEC’s research site for investors.
- Check any individual on FINRA BrokerCheck, run by the organization that oversees brokerage firms. It shows where an advisor is registered and any disciplinary history.
What Does “Fiduciary Services” Mean?
Some people searching for fiduciary services need a trustee, someone who manages assets held in a trust, or an executor, who carries out a will. Those are separate fiduciary roles.
Concenture doesn’t serve as a trustee or executor, and we don’t offer trust services directly. When those roles come up, we work alongside your estate attorney through our legacy and estate planning work so your account titles and beneficiary designations match your documents.
Frequently Asked Questions
What is a fiduciary financial advisor?
A fiduciary financial advisor is legally required to put your interests ahead of their own when advising you. For investment advisers, that duty is rooted in the Investment Advisers Act of 1940 and includes a duty of care and a duty of loyalty, covering ongoing professional investment management and planning advice.
Are all financial advisors fiduciaries?
No. “Financial advisor” is a general title, and the standard depends on how the professional is registered. Investment advisers act as fiduciaries, while brokers making recommendations follow the best interest standard. Many professionals are both, so ask about each account when you choose a wealth advisor in Houston.
What’s the difference between the fiduciary standard and the best interest standard?
Is Concenture a fiduciary?
Our advisors are qualified to act as fiduciaries. We act as fiduciaries when we manage your investments and when we give financial planning advice. When we recommend an investment in a brokerage account, we’re required to act in your best interest at the time of that recommendation. We’ll tell you which standard covers each of your accounts.
How can I check whether an advisor is a fiduciary?
Start with the firm’s Form CRS, a short summary of its services, fees, conflicts, and legal standard of conduct. Find any firm’s summary on Investor.gov and any individual on FINRA BrokerCheck, then ask the advisor to confirm in writing which standard covers each account. Add that to your pre-retirement checklist.
“The best financial decisions aren’t about predicting the future — they’re about preparing for it.”
– Karen Heider
What our clients say about us
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