Specializing in retirement planning and personalized investment management.

QuickGuide Videos

The easiest way to learn about Blue Water and what we offer is to watch our QuickGuide videos.

Afterwards, if you are in interested in talking to Blue Water about your situation and our services, please schedule a complimentary phone meeting. We’ll send you a short questionnaire to complete and the password to our Due Diligence area. In our initial phone meeting, we’ll discuss what you’re looking for, the services we think would be appropriate for you, our fees, and the next steps.

Fiduciary vs. Suitability - Two Different Standards of Care

This video helps to explain the different standards of care in the financial services industry.

Some advisors and brokers adhere to a fiduciary standard of care while others use a suitability standard of care. Do you know what the difference is?

Under a Fiduciary Standard, an advisor must always act in the best interest of their clients. The advisor makes recommendations as if they were the client, or the client were a family member. In fact, an advisor must disclose any conflicts of interest, disclose all of their fees and strive for reasonable investment costs.

Some advisors and brokers operate under a suitability standard of care. An advisor or broker just has to make sure that an investment product is suitable for a client based on the client’s financial needs, objectives, and unique circumstances. It’s not well-known but there are a lot of advisors who operate under both standards of care and switch between them. Sometimes they wear the fiduciary hat and other times they wear the suitability hat.

The suitability standard is generally for commission-based product sales, so any advisor or broker who earns commissions will fall under that standard at least some of the time. Fee-Based advisors can earn fees and commissions, so they are more apt to switch between the two standards of care. It doesn’t mean that Fee-Based advisors are unethical, or can’t always operate under the Fiduciary standard. It just means, they don’t always have to.

Most Fee-Only advisors work exclusively under the Fiduciary standard. However, the best way to know for sure is to have an advisor sign a Fiduciary Oath, where they specifically state that they will not operate under the suitability standard, and will only work with you under the fiduciary standard of care.

What is the difference between 'Commission-Based', 'Fee-Based', and 'Fee-Only' When it Comes to Financial Advising?

This video helps to explain the different financial advising models when it comes to 'Commission-Based', 'Fee-Based', and 'Fee-Only'.

Commission-based is as it sounds, an advisor or agent is compensated mainly by earning commissions on products they sell. They may also earn bonuses and incentive vacations by meeting quotas on certain products. Just because an advisor is commission-based does not mean they are unethical. However, commissions to create conflicts of interest. It makes you wonder whether they are recommending a product because it's right for you, or it's right for them.

Fee-Only is on the other side of the spectrum. Fee-Only means no commissions. A Fee-Only advisor is compensated 100% from his/her clients in the form of financial planning and investment management fees. They do not accept kickbacks or other incentives for recommending certain investments or products. Their incentive is to provide you good service and advice so you continue working with them. Fee-Only is considered to be better aligned with the client and their goals. It also has the least conflicts of interest.

So what is Fee-Based? Fee-Based is an advisor who is compensated in the form of fees for financial planning and investment management, AND commissions for investments and insurance they sell. Most advisors are fee-based. While they may emphasize that they work on fees, they can also recommend products that they earn a commission on. There are more conflicts of interest because of the ambiguous nature of the business model. “How am I paying for advice? Are they working for me, or are they trying to sell me something?”

Schedule a complimentary 30-minute phone meeting.

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