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Bottom Line Up Front

  • While some people are confident doing their own financial planning, many would benefit from having a professional financial advisor offer advice.
  • Advisors are paid in several different ways, and the fee structure may influence what kind of advice you receive.
  •  “Fiduciary” financial advisors are obligated to put your best interests first when offering advice, but there may be times when a non-fiduciary advisor is appropriate, too.

Time to Read

5 minutes

May 2, 2022

When is it time to call in a professional?

Deciding to invest for retirement is easy—and smart—but deciding how to invest may be more complex. A professional financial advisor can help you navigate the world of investing and make informed financial decisions. You may want to consult a financial advisor if you:

  • need help creating a retirement savings portfolio (the collection of investment products that an investor holds, often a mix of stocks, bonds, mutual funds and certificates). A financial advisor can help you sort through all your options.
  • have come into a large amount of money and don’t know how best to handle it. A nice windfall can easily dwindle without a sound investment strategy.
  • don’t have much money but want to make the most of it. An advisory firm can help you create portfolio management strategies designed to leverage small amounts of savings. 
  • have reached a financial goal and it’s time for a new plan. New personal finance and investing concepts can help you get to the next level.
  • are far from your savings goal and need a new strategy. If you’re frustrated with your progress, the right financial advisor can help you take a fresh look.
  • just want a sounding board to talk about your financial situation. A neutral third party can help you assess your options and guide you in the right direction.


Choosing a Fee Structure

It’s important to understand how the person who gives you advice about investments will be paid. That could influence what kind of financial advice you’ll receive or even create conflicts of interest. In general, there are 3 ways you might pay for investment management:

  1. Hourly fee. You pay the advisor for the time they spend working with you.
    Pro: If you just want a quick opinion, this may be the least expensive route.
    Con: If you want ongoing financial planning, these charges can quickly add up.
  2. Fee-only. Here, the advisor charges a flat fee, generally a percentage of the assets under management each year. 
    Pro: The better your investments perform, the more the advisor will be paid—encouraging the advisor to manage your investments prudently.
    Con: A typical fee is 1% of assets, which can add up over many years.
  3. Commission-based. In this case, advisors are paid a commission based on the products you buy. 
    Pro: You generally pay this only when buying or selling.
    Con: Some advisors could have incentives to steer you toward an investment that pays them a higher commission.

Usually, financial advisors acting as “fiduciaries” use the fee-based model. Brokers or dealers and other financial advisors who sell securities may be more likely to use the commission-based model.


What is a fiduciary?

There are lots of different names for financial advisors. They might be called certified financial planners (CFPs), investment advisors, registered investment advisors, certified public accountants (CPAs) or chartered financial consultants (ChFCs), among others. But, whatever their designation, they will have one of 2 kinds of client relationships: fiduciary or non-fiduciary.

Advisors under the fiduciary standard are legally and ethically required to choose suitable financial products and act in your best interest, both in the near future and in the long term. A federal rule, announced in April 2016, requires financial advisors who give advice specifically for retirement to act as fiduciaries, even if it means less revenue for them.

However, there is a “best interest contract exemption,” allowing for certain commission-based transactions as long as they’re still in the client’s best interests.

While non-fiduciaries must also provide suitable advice, they’re not forbidden from taking their own as well as their clients’ interests into account, such as how much commission they may earn.

When to Work With a Fiduciary

You can request a fiduciary relationship for all your financial arrangements, such as estate planning, not just retirement planning. This can be beneficial because your advisor is more focused on your long-term goals with fewer potential conflicts of interest. You may find a fiduciary investment advisory best when you’re interested in:

  • a variety of services, including long-term financial planning
  • ongoing wealth management and annual or more frequent reviews
  • the ability to rebalance and reposition your portfolio without additional fees

When to Work With a Non-Fiduciary

In some cases, you may find that it’s to your financial advantage to work with a professional who isn’t a fiduciary. This type of relationship may work better for you when you:

  • have few assets or are working toward short-term goals
  • are a sophisticated investor
  • are a buy-and-hold investor who doesn’t want ongoing account management 

When you’re starting a new relationship with an advisor, it’s also a good idea to review and verify their credentials using BrokerCheck, a free service of FINRA, a group that regulates the investment industry. At Navy Federal Credit Union, we have financial advisors available through Navy Federal Investment Services by phone and on-site in more than 150 branches. We can get you the personal help you need.

Key Takeaways Key Takeaways


Navy Federal Financial Group, LLC (NFFG) is a licensed insurance agency. Non-deposit investments, brokerage, and advisory products are only sold through Navy Federal Investment Services, LLC (NFIS), a member of FINRA/SIPC and an SEC registered investment advisory firm. NFIS is a wholly owned subsidiary of NFFG. Insurance products are offered through NFFG and NFIS. These products are not NCUA/NCUSIF or otherwise federally insured, are not guaranteed or obligations of Navy Federal Credit Union (NFCU), are not offered, recommended, sanctioned, or encouraged by the federal government, and may involve investment risk, including possible loss of principal. Deposit products and related services are provided by NFCU. Financial Advisors are employees of NFFG and are employees and registered representatives of NFIS. NFIS and NFFG are affiliated companies under the common control of NFCU. Call 1-877-221-8108 for further information.


This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.