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Why Select a Fiduciary

Fiduciary Financial Advisors Do Their Research

Fiduciaries must make sure their recommendations are based on accurate and complete information. That means they are required to thoroughly analyze your accounts, goals, and circumstances before recommending that you buy an investment or use a particular savings vehicle. Fiduciaries must then monitor their recommendations to make sure that it remains appropriate for their clients on an ongoing basis.

They Are Clear About Their Fees

Advisors who follow fiduciary requirements have to be upfront about all of the fees they charge and commissions they receive. This kind of transparency is critical because fees, expenses, and commissions can be major detractors from your portfolio’s long-term performance.

Even a seemingly small annual fee – say, 0.75% – can cost investors tens of thousands of dollars in lost investment growth over a 20-year period, according to the Securities & Exchange Commission.

Fortunately, the fiduciary standard discourages advisors from offering investment recommendations that cause clients to pay higher fees and commissions. As a result, working with a fiduciary can help keep your costs down and your savings up.

They Must Avoid Conflicts of Interest

Fiduciary advisors must disclose any instance in which they are compensated for making a certain recommendation. In fact, under the Department of Labor’s recently enacted fiduciary rule, advisors working with retirement accounts are barred from making recommendations that represent a conflict. For example, an advisor can’t buy a stock and then try to pump up the price by buying it for their clients’ portfolios, nor could they recommend a product that resulted in higher commissions or fees for themselves.

A fiduciary advisor will help you minimize fees, avoid conflicts of interest, and put you at the center of any financial advice. If your current financial advisor doesn’t seem to model these behaviors, consider finding one who does.

When selecting a financial planner to work with, one factor you may want to consider is their demonstrated commitment to developing and maintaining competency through education or attaining professional designations. Because the New Jersey Financial Advisors Network is invite-only, every member of our group is highly credentialed and abide by rigorous standards.

Every single member of the New Jersey Financial Advisors Network maintains the necessary licenses and registrations to provide professional financial planning and investment advice. All NJFAN members are either CERTIFIED FINANCIAL PLANNER™ professionals or CFP® candidates, meaning that they have completed the education requirements and passed the CFP® exam. Some of us also hold additional certifications related to financial planning such as Enrolled Agent or Chartered Financial Analyst.

Please note that all of these professional designations are strictly voluntary and are not required by any regulatory agency to be able to provide financial planning or investment management services to clients.

Certified Financial Planner (CFP®)

CFP® certification is generally acknowledged as the highest standard in personal financial planning. This certification demonstrates a deep knowledge and commitment to a career providing professional financial advice. It is the most distinguished professional designation within the financial planning industry. Certification is granted and controlled by the Certified Financial Planner Board of Standards and characterized by its:

  • High standard of professional education
  • Stringent code of conduct and practice standards
  • Ethical requirements governing engagement with clients

To attain the CFP® marks, an individual must complete four requirements known as the “Four E’s”:

Education

  • Attain a Bachelor’s degree or higher from a regionally accredited university
  • Complete an advanced course of study covering the financial planning subject areas defined by the CFP Board as being important for the delivery of competent, professional financial advice. Subject areas include investment planning, insurance and risk management, income tax planning, estate planning, employee benefits planning, retirement planning, and others.

Exam

  • Pass the comprehensive CFP® certification examination. The examination is administered in 2 sessions of 3 hours each with a brief break in between. It includes case studies and client scenarios designed to test students’ ability to correctly diagnose a wide range financial planning issues and apply their knowledge of financial planning to real world circumstances. The exam is designed to cover a wide range of subject areas, and passing is regarded as a tremendous accomplishment.

Experience

  • Because CFP® certification indicates to the public the ability to provide professional financial planning services without supervision, candidates are required to accumulate either 6,000 hours of experience through the Standard Pathway, or 4,000 hours of experience though the Apprenticeship pathway that meets additional requirements. Qualifying experience may be acquired through a variety of activities and professional settings including personal delivery, supervision, direct support, indirect support or teaching. Experience is often required to be supervised or verified by a CFP® professional.

Ethics

  • Individuals must agree to be bound by the CFP Board’s Standards of Professional Conduct, which consist of a set of documents outlining the ethical and practice standards for practitioners.
  • Certificants are also required to adhere to a fiduciary standard while providing financial planning services, meaning that they agree to put their clients’ best interests before their own.

Maintaining CFP® certification requires a minimum of 30 hours of continuing education every two years, including 2 hours on the Code of Ethics. It also requires renewal of the agreement to be bound by the Standards of Professional Conduct. You can learn more about CFP® certification at http://www.cfp.net

The following members of the New Jersey Financial Advisors Network maintain current CFP® certification:

 

Enrolled Agent (EA)

An Enrolled Agent is a person who has earned the privilege of representing taxpayers before the Internal Revenue Service by either passing a challenging three-part comprehensive IRS test covering individual and business tax returns or through experience as a former IRS employee. Enrolled Agent status is the highest credential the IRS awards.

Individuals who obtain this elite status must adhere to ethical standards and complete 72 hours of continuing education courses (specifically related to federal taxation) every three years. Enrolled agents, like attorneys and Certified Public Accountants (CPAs), have unlimited practice rights. This means they are unrestricted as to which taxpayers they can represent, what types of tax matters they can handle, and which IRS offices they can represent clients before.

You can learn more about Enrolled Agents in Treasury Department Circular 230 or on the IRS website at https://www.irs.gov/Tax-Professionals/Enrolled- Agents/Enrolled-Agent-Information

The following members of the New Jersey Financial Advisors Network are currently Enrolled Agents

 

Chartered Financial Analyst (CFA)

The Chartered Financial Analyst® (CFA) credential is granted by the CFA Institute and is one of the most respected and recognized investment management designations in the world. The CFA Program provides a strong foundation for advanced investment analysis and real-world portfolio management skills.

The course of study is organized into three levels and each level requires passing a six-hour exam. The program curriculum increases in complexity as you move through the three levels:

Level I: Focuses on basic knowledge of the ten topic areas and simple analysis using investment tools

Level II: Emphasizes the application of investment tools and concepts with a focus on the valuation of all types of assets

Level III: Focuses on synthesizing all of the concepts and analytical methods in a variety of applications for effective portfolio management and wealth planning

Candidates report dedicating in excess of 300 hours of study per level to prepare for each exam.

Besides passing the exams, becoming a CFA charter holder also requires 48 months of acceptable professional work experience and membership in the CFA Institute. You can learn more about the CFA at https://www.cfainstitute.org/programs/cfaprogram/charterholder/pages/index.aspx

The following members of the New Jersey Financial Advisors Network are currently CFA charter holders