In the last few years, lines have blurred between financial advisors and insurance agents. Many professionals consider themselves both, when they’re not. The problem is that the word “advisor” has become a broad term to refer to anyone who provides advice on a financial topic.
This can be problematic when it comes to your financial well-being. The question now is, do you know what kind of advisor you’re working with?
Why an Insurance Agent isn’t a Financial Advisor
Not all financial professionals are required to act in their client’s best interest. Brokers and insurance agents acting on the other party's behalf are not required to serve in a fiduciary manner. As they represent themselves or their company, they are only required to provide their clients with “suitable” financial products, rather than those recommended based on their individual circumstances.
What do we mean by “suitable?” In the industry, unless one is held to a fiduciary standard, a recommendation made by an insurance agent only has to be “suitable.” The problem with this is that some agents could then sell high-fee policies, even if a lower-priced option was just as suitable or available, in order to receive a higher commission.
It becomes problematic when insurance agents claim to be financial advisors when they’re actually selling preferred products and working more as a salesperson than an advisor. While a financial advisor’s goal is to take a comprehensive view of a client’s situation and then help the client work toward those goals, an insurance agent is typically more focused on determining a client’s need that their insurance product can address. Essentially, it’s fitting you into a product rather than finding a product that fits into your objectives.
Types of Advisors
It’s important to note that not all advisors are the same, either. Wall Street brokerage firms can sell proprietary products, so their advice may potentially still be biased, like an insurance agent’s.
For example, annuities and other high-fee investments that provide brokers a higher commission can still be sold into your retirement account. Additionally, while brokers must inform clients that they’re choosing to be paid commissions, if the investor neglects to read the email notification, they won’t know where their broker’s interests lie.
An advisor who serves in a fiduciary capacity goes beyond finding “suitable” strategies and products and puts a client’s needs first, providing advice and recommendations that will benefit them. Think of a fiduciary like a trustee—someone who is given and accepts the responsibility of managing assets for a someone else. This duty helps protect you from conflicts of interest.
How to Know With Whom You’re Working
It’s important to thoroughly research an advisor before choosing to work with him or her, and to understand where their loyalty lies. An advisor should be open to sharing with you their business philosophy, how they choose investments, what their process looks like, any potential conflicts of interest they face, and how they’re paid.
You may also consider speaking with them about their fiduciary commitment. Independent advisors with designations like the Accredited Investment Fiduciary® are required to uphold a fiduciary duty. This certification, which I hold, means that our firm adheres to a strict fiduciary standard of care and acts solely in the best interests of our clients. We are dedicated to providing CRNAs with the most personalized and objective advice we can give without any conflicts of interest. We are required to act with undivided loyalty to you and provide complete transparency and disclosure when it comes to our compensation or investment approach.
At CRNA Financial Planning®, we take pride in our transparency and objectivity. If you’re unsure about your current financial strategies, haven’t reevaluated your investments in several years, or are just interested in learning more about what it means to work with a financial advisor versus an insurance agent, we are happy to offer you a complimentary consultation.Call our office at 855.304.3748 or email firstname.lastname@example.org.
About Jeremy Stanley
Jeremy Stanley is the founder of CRNA Financial Planning® as well as CRNA Tax Associates®. He has been providing advice and guidance for Certified Registered Nurse Anesthetists (CRNA) for over two decades. As a CERTIFIED FINANCIAL PLANNER™, Jeremy has met rigorous certification and professional standards set by the CFP® Board. He is committed to adhering to the principles of integrity, objectivity, competence, fairness, confidentiality, professionalism and diligence when dealing with clients.
Jeremy is also the author of The Wealthy CRNA and A CRNA’s Life After Anesthesia. The Wealthy CRNA features insights into becoming a financially successful CRNA and how to start planning for your financial future, and has been prior approved for up to 4 Class A CE credits by the AANA. A CRNA’s Life After Anesthesia serves as your financial roadmap for a smooth emergence into retirement. It reviews recent changes in the CRNA industry along with the new rules of retirement and the final steps of legacy planning. This book has been prior approved by the AANA for up to 2 Class A CE credits.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.