Taylor Schulte | Finance
Juicing, the latest food trend in San Diego, is nothing new. We have been crushing our fruits and vegetables using blenders and juicers for decades.
But, the latest argument is that traditional centrifugal juicers aren’t cutting it anymore. Your juice should be “cold pressed,” according to the experts.
Apparently, cold pressed juicers extract juice more safely by slowly grinding and pressing the fruits and vegetables, instead of shredding them with fast-spinning blades. Those high velocity blades in a traditional juicer generate heat, which can destroy many of the nutrients and enzymes in your fruits and vegetables. Cold pressed juicers reduce the heat and create a more nutrient-filled snack.
Similar to the cold pressing juice aficionados, I’m a firm believer that the way financial advice has been delivered for decades can be greatly improved upon. I believe there is a safer way to extract financial advice from the experts — a way that puts your interests ahead of theirs, at all times.
The traditional model that many financial advisors have adopted and still operate under today is called the “suitability standard.” Simply put, if these advisors, often known as “brokers,” can determine that a financial product is suitable for your investment profile, he or she can sell it to you. They are not obligated to consider costs, expenses, or even the best interests of the client.
If that’s not enough to cause some concern, these fast-spinning brokers are often selling a product in return for a commission. Not only does this compensation model present a potential conflict of interest, the client typically pays more for their advice than necessary. Needless to say, the characteristics of the suitability standard model can destroy the value often found when working with a financial professional.
On the other hand, the “fiduciary standard” is a more appropriate way to render financial advice, in my opinion. A financial professional adhering to the fiduciary model is required by law to put your interests ahead of theirs at all times.
Fiduciaries — often referred to as registered investment advisors (RIAs) — typically charge a flat, transparent fee in return for the advice they provide. This fee is usually billed as a percentage of assets, an annual fee, a monthly fee, or even an hourly fee. Regardless of how the fee schedule is structured, the consumer is always informed of the amount and their interests are always put first. Costs, expenses, quality of product and more are taken into consideration before making any recommendations.
Due to the stricter obligations of a fiduciary, the advice process is often longer than a commissioned broker. A fiduciary will take their time extracting the unique characteristics of the client and prepare a plan that puts them in the best possible situation for success. In addition, RIAs will typically render advice on more than just investments. This might include tax planning, estate planning, charitable giving, college planning and more.
Financial professionals have been rendering advice under the suitability standard for decades. Like traditional centrifugal juicers, it is a solution, but not the best one.
If you want objective, conflict-free financial advice, get it “cold pressed” and work with an advisor who has adopted the fiduciary standard.
—Taylor Schulte, CFP® is the founder of Define Financial in Downtown San Diego. Schulte specializes in providing independent, objective, financial advice to individuals, families and businesses. He can be reached at 619-577-4002 or taylor@definefinancial.com.
