Know the Difference Between Advisors and Salespeople
Are you willing to sell a person a shoe that doesn’t fit vs losing the sale because you don’t have the right size?
— David Booth, Founder of Dimensional Fund Advisors
Unfortunately, too many financial firms and their employees focus more on selling products versus trying to provide advice and solve investor needs. Only independent financial advisors are legally required to act as a fiduciary — which means they must always put your interests as a client ahead of their own. In addition they must disclose all important information to you, including fees charged and any conflicts of interest.
So when independent advisors make a recommendation, it has to be in your best interests — not because they just want to make a quick sale. It is like the difference between getting health advice from a doctor versus a pharmaceutical salesperson. Pharmaceutical sales reps can only sell the medicine their company manufactures. A doctor, on the other hand, must prescribe the right medicine for each patient, regardless of the manufacturer. Independent advisors take the same approach when advising their clients. They are indifferent to who made a financial product: their only focus is getting the best resources to help solve each person’s unique situation.