A fiduciary advisor is under a legal obligation to do what is in your best interest as a client at all times, not in their own interest. Fiduciary advisors can be considered to be “on the same side of the table with you” because they are not allowed to make commissions on stock market trading. They work on a fee basis, and when your accounts go up in value, they make more—and vice versa—if your accounts go down, they make less. Thus, they have a vested interest in your success.

The standard that brokers and other types of financial professionals are held to is called the “suitability” standard, which can be thought of as less rigorous by comparison, and time-based. Rather than being in your best interest, an investment may be deemed “suitable” for you at the time it was recommended. By contrast, a fiduciary advisor has an ongoing duty to you to compare underlying fees and costs versus potential return for the long-term, throughout the entirety of the advisor/client relationship.

A fiduciary must consider your entire financial situation and overall financial plan, they aren’t trying to sell you a stock or a product. A fiduciary advisor may find that you shouldn’t undertake a course of action at all, and they are mandated to remain agnostic and unbiased even when a recommendation doesn’t benefit them as an advisor—because your best interests must come first and foremost at all times.

Public Versus Private Sector Investments

On another topic, ABC Lowcountry Live’s host, Tom Crawford, mentioned that this is an election year, and Tom asked Jason and Joe why people might want to consider diversifying their portfolio by holding both private as well as public sector investments.

The public sector is comprised of investment opportunities you can find on the New York Stock Exchange, for instance, the S&P 500, or the Russell 2000 Index, etc.

Private markets are investment opportunities that come from businesses that are not publicly traded. Private market investments can help some clients* in terms of their overall portfolio’s risk-versus-return strategy.

For instance, as Joe Harrish explained, in this election year, the geopolitical risk is considered by some advisors to be extreme. We don’t know what’s going to happen with this year’s election cycle, so for some fiduciary advisors who have access to private market investments like Prime Capital, Joe says Prime Capital fiduciary advisors can go into the private space as a portfolio strategy to reduce geopolitical risk and potentially produce outsize returns in some cases. Especially on the fixed income side—Prime Capital has access to a lot of literally dozens of different private investments that can create very steady returns and income replacement in some cases without taking on certain geopolitical risks, such as whatever is happening with Russia/Ukraine or our U.S. election.

When it comes to adding private market investments to the portfolio, as fiduciary advisors it’s all about diversification and following each portfolio’s risk capacity and the risk tolerance of each individual client. In fact, discipline and persistence is part of both Jason Noble’s and Joe Harrish’s overall approach as fiduciary advisors—they both come from military backgrounds.

*Accredited and/or Qualified Client status may be required.
For more information, please visit: https://www.sec.gov/education/capitalraising/building-blocks/

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