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As An Employer, What's The Difference Between An Advisor And A Fiduciary?

Posted: Jul 14, 2022 4:15:34 PM

AdobeStock_273446847Did you know that 48% of U.S. workers believe that they do not make enough money to plan for retirement? Investing is one of the best ways to grow your wealth and prepare for retirement. It can also be incredibly intimidating. If you're like most people, you probably have no idea where to begin when it comes to investing. That is where investment advisors and investment fiduciaries come in– but which one?

For many professionals, working with an investment advisor or investment fiduciary can make all the difference. In this article, we will take a look at what investment advisors and investment fiduciaries do, the difference between the two, and how they can potentially help you.


What Is an Investment Advisor?

An investment advisor is a person who provides personal guidance on the best ways to invest. Advisors assist with personal financial management by helping clients make sound decisions for their future. An investment advisor can help with:

  • Asset allocation
  • Tax strategies
  • Retirement planning
As an employer, it's important to find someone who can help your employees understand these concepts and make sure that they are getting the best advice.


What Is an Investment Fiduciary?
Investment fiduciaries are financial professionals that take on the legal liability for the fund lineup and make sure that the assets of their clients are properly handled. A fiduciary is required to put your best interests, as a client, first at all times. Investment Fiduciaries work to get the best possible investments to choose from into the plan. Some Investment fiduciaries also manage models to make it simple for employees to have their money managed. Very few investment fiduciaries provide both corporate and employee help.

 

3(38) Investment Fiduciary
A 3(38) investment fiduciary takes on the majority of the responsibility for the investments in the plan. This type of advisor uses asset allocation, rebalancing, and other strategies to help your employees reach their goals. Before hiring this type of investment fiduciary, you should ask these 10 questions.


Investment fiduciaries are qualified to handle and grow your money based on their knowledge and experience in investing.

 

What Makes Them Different?
Not everyone providing financial advice is a fiduciary. Investment advisors are people who provide personalized investment advice to an employee, but they can have incentives to recommend products or investments that may not be in your best interest, helping them earn a larger sales commission. Advisors can be compensated by fees, commission, or both.


Commissions are a source of income for advisors. Upfront, a commission-based financial advisor who's not a fiduciary could appear to cost less, but over time, those fees can accumulate when factored into the financial product/package being offered.

In contrast, An Investment Fiduciary is obligated to find the best investment fund lineup for the plan and is usually compensated by a percentage of assets under management. Investment fiduciary fees are based on the value of the service provided and not on the sale of any product or service. This puts the employer and the employee in a more comfortable position with an investment fiduciary recommendation because you know their income is not dependent on selling you something. 


Choosing the Right One for You
Finding a proper advisor or investment fiduciary can be difficult. The goal is to find someone who can provide the necessary information to make smart decisions for your employees while creating the best fund lineup for the company.

To decide if an advisor or an investment fiduciary is the best for you, first ask yourself what your goals are. If your goal is to increase the company’s fiduciary protection, then you may want an investment fiduciary. If your goal is to have an employee get personal help, then you may want an advisor.


Finding an advisor or investment fiduciary that has experience in the fields of personal finance and investment management is hard work. The value of having a firm that provides ongoing guidance cannot be overstated when it comes to making sure that your money is working hard for you.

Benefits of Working with GGA Retirement as an Investment Fiduciary

Are you an employer who provides employee benefits, such as 401k? Do you want a firm that will speak directly to your employees and be responsible for the fund lineup? Working with GGA will improve your employee retirement participation.

Additionally, we will create an interactive app for your company’s employees that will help them meet their goals and needs. Your employees can call us directly. When you work with GGA Retirement, both options are covered for you.



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