Finding a Financial Advisor Who Meets the Fiduciary Standard

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Making the decision to use professionals to help with financial planning is great, but how do you choose the right professionals? Financial planning is full of confusing jargon.

Fiduciary and suitability are terms you’ve probably come across when looking for this type of help, but do you actually know the difference between the two terms? The professionals at Cardinal Advisors act at a fiduciary level, while including suitability, when assisting you with financial planning and we’ll tell you why.

What does Suitability mean?

When an advisor says they are required to meet a “suitability standard,” that means the advisor has to answer “yes” to the question: “Is this product going to meet the needs of the customer?” The recommendation an advisor makes must be suitable for the client. And while it’s difficult to recommend something unsuitable, there are a few things to consider with financial planning, including excessive transaction costs and frequently switching account assets so that an agent makes more money.

It’s also of great importance to know that advisors following the suitability standard can have an undisclosed conflict of interest with the products they provide. Under the suitability standard, advisors are allowed to sell you products, largely benefitting them, as long as the product qualifies as “suitable.” When working with an advisor under a suitably standard, it’s ultimately up to you to figure out if the product is right for your financial needs. The advisors’ loyalty is not to you, but to themselves and their employer.

This is why Cardinal Advisors follows a fiduciary standard- we are required to put your needs ahead of ours!

So, What Exactly Does “Fiduciary” mean?  

To meet a fiduciary standard, an advisor must place the interests of the clients above their own. This means not only does a fiduciary meet the suitability standard, but they surpass it.

Conflicts of interest are to be avoided when making recommendations. A fiduciary is required to be transparent about these conflicts, and if they can’t be avoided, they must be disclosed. This is most easily demonstrated in regards to commissions. For example, when an advisor is selling you a policy or recommending an investment, if they earn a commission it must be disclosed. When acting as a fiduciary, an advisor cannot sell you a product based on the amount of commission they’ll receive. Your best interests must be the overriding priority.

To put it in perspective, say you were shopping for a financial product that would require paying fees. An advisor following a suitably standard could make a recommendation on which the fees are much higher because they’ll get a higher commission while an advisor following a fiduciary standard would not be able to recommend this product if there was another they could recommend with similar benefits and less fees.

A fiduciary advisor cannot put personal needs above the needs of the client.  Fiduciaries are required to choose a product that meets the best interest of the customer.

How Do I Find a Fiduciary?

Sometimes it can be difficult to find an advisor who is required to follow a fiduciary standard. Many people don’t advertise this point specifically, though it’s definitely something to consider when choosing a financial advisor.

First and foremost, you can look for a CFP® associated with someone’s name. CFP® certification requires that the professional, or in this case financial advisor, acts a fiduciary. You can search for a CFP® in your area here.

Second, if you are looking for help with your IRA or 401k, as of June 9th of this year, all advisors must act as fiduciaries with regards to your “qualified money”.

The last, and easiest, way to figure out if your financial planner is a fiduciary is to simply ASK.

Cardinal Advisors acts as a fiduciary for our clients. We work in all 50 states and D.C., but if you would like a local financial advisor, we can help you find a fiduciary advisor in your specific area. Cardinal Advisors home office is located in Cary, NC. Our financial advisors like to meet an individual seeking financial assistance face to face, but we’re also free to help people all over, with the promise  that we can find an advisor who follows the fiduciary standard.

Hans Scheil is the author of “The Complete Cardinal Guide to Planning for and Living in Retirement” and the accompanying workbook. He can be reached at Hans@CardinalGuide.com.

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Finding a Financial Advisor Who Meets the Fiduciary Standard

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Understanding the Upcoming 2026 Income Tax Increase: What You Need to Know

A Brief History of the Tax Cuts and Jobs Act (TCJA)

In today’s Cardinal lesson, we’re discussing the significant changes coming to income tax rates in 2026. This isn’t a proposal but a law already set in motion. The Tax Cuts and Jobs Act (TCJA), passed in 2017 and effective from January 1, 2018, brought about substantial reductions in income taxes. However, these reductions were only funded for eight years, meaning they will expire at the end of 2025.

What Changes to Expect in 2026

As of January 1, 2026, the tax rates will revert to their 2017 levels, adjusted for inflation. Key changes include:

  • The 12% bracket will increase to 15%.
  • The 22% bracket will rise to 25%.
  • The top rate of 37% will revert to 39.6%.

Not Just a Proposal

It’s crucial to understand that this change is already the law. Many people mistakenly believe that the tax rate increases are still under discussion. However, unless Congress enacts new legislation, these higher rates will take effect as scheduled.

Implications for Your Financial Planning

Impact on IRAs and 401(k)s

With the current lower tax rates, now is the time to consider strategies like Roth conversions. By converting funds from a traditional IRA to a Roth IRA now, you can potentially save a significant amount in taxes over the long term.

Why Planning Ahead is Crucial

For individuals with substantial retirement savings, understanding these changes is vital for effective tax planning. The window to take advantage of the current lower tax rates is closing, and planning ahead can make a significant difference.

Case Studies and Planning Opportunities

Hans Scheil and Tom Griffith discuss specific case studies and planning strategies in our latest video. These examples illustrate how different scenarios can be managed effectively:

  • Case Study 1: A married couple with an adjusted gross income of $150,000 in 2024 can convert part of their IRA to a Roth IRA, taking advantage of the lower current tax rates.
  • Case Study 2: High-net-worth individuals with large IRAs can save substantial amounts in taxes by planning conversions over the next two years.

Estate Tax Considerations

The TCJA also doubled the estate tax exemption, which will revert in 2026. This change can significantly impact high-net-worth individuals, making estate planning more crucial than ever.

Action Steps to Take Now

  • Review Your Current Tax Situation: Analyze how the upcoming changes will affect your finances.
  • Consider Roth Conversions: Take advantage of the lower tax rates before they expire.
  • Plan for Estate Taxes: Assess your estate plans in light of the changing exemptions.

Conclusion

The changes coming in 2026 are significant, but with proper planning and informed decision-making, you can navigate these changes effectively. Watch our video for more detailed insights and personalized advice.

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