Investors Seek Fiduciary To Manage Portfolios

Arbor Wealth Utilizes Fiduciary, Fee-Only Model

We continue to hear more and more about the term ‘fiduciary’.  We asked Margaret McDowell, ChFC®, AIF® of Arbor Wealth Management what the term means relative to the investment advisory industry.

Question:  If an investor seeking a relationship with an advisor wants to work only with a fiduciary, how does he/she go about determining if the advisor is one?

Arbor Wealth:  Normally you can tell from a firm’s website, without having to call them and ask.  We have a “Fiduciary/Fee-Only” menu button on our website ( and a page devoted to those two terms and what they mean.  If a person seeking a relationship with an investment advisor is unsure if the advisor is a fiduciary, he/she should simply call and ask that one simple question:  “Are you a fiduciary?”  Or, if you want to know if your current advisor is serving as a fiduciary to you, simply ask them.

Question:  What does the term ‘fiduciary’ mean and what is its significance in the investment industry?

Arbor Wealth:  The Latin root is ‘fiduciarias’, meaning “something held in trust,” and of course with an investment advisor that means a client’s assets are entrusted to an advisor.  There are several working definitions, as the term is also utilized to describe the legal status of attorneys, CPA’s and certain other professionals.  In the investment advisory industry, a fiduciary is held to the highest standard of client care and has a legal, moral and ethical obligation in act in the client’s best interests. 

 Question:  So some investment advisors are not fiduciaries?

 Arbor Wealth:  That’s correct.  Wirehouse advisors, like stockbrokers, are not fiduciaries.  Language in their investment advisory agreements may state that they may make recommendations that benefit their firm but not necessarily the client. 

 Question:  What would be an example of that?

 Arbor Wealth:  If an advisor is paid a commission for placing any part of your assets in a certain fund, then he is being paid by a source other than the client.  For instance, if an advisor places your assets in a parent company mutual fund, say a mutual fund run by the company for which he works, he may be paid a higher commission by the parent company.  So the client may be unsure if the advisor is placing the money in this fund for the advisor’s benefit or for the benefit of the client. 

 Question:  So as a fiduciary, you receive income only from your clients?

 Arbor Wealth:  That is exactly correct.  We are compensated solely by our clients.  So obviously, our loyalty is to them and them only and we are completely committed to acting in their best interests.  Contrast this arrangement with, say, the sale of an annuity.  A commission is paid to the annuity salesperson and again, the client may not know, after having been sold one, if the sale of the annuity was in his best interests or the best interests of the salesperson.

 Question:  So you don’t receive commissions and you don’t sell products.  What do you invest your clients in?

 Arbor Wealth:  Exactly.  We sell no products, accept no commissions from any source and we have no proprietary interest in any fund family.  We have access to any security and all financial instruments.  We choose from common stocks; preferred stocks; individual bonds; closed end funds; exchange traded funds; mutual funds; master limited partnerships and real estate investment trusts.  Whatever we feel best suits the client’s goals, risk tolerance, age and financial situation, that’s what we invest in on their behalf.

 Arbor Wealth Management, LLC, a “Fee-Only” Registered Investment Advisory Firm, will host “Income Generation: Making Your Portfolio Pay Monthly” Wednesday, May 29 at 10 a.m. and 5 p.m., in the Arbor Wealth Conference Room. Firm Founder and Principal Margaret R. McDowell, ChFC, AIF, will lead an investment presentation featuring “Income with Growth” and “Growth with Income” strategies for investors. McDowell, who has been interviewed by the Wall Street Journal on Arbor Wealth’s investments in dividend-payers, explains how Arbor Wealth creates systematic, periodic income for clients from stock dividends and coupon payments from bonds. Refreshments will be served. Please call 850-608-6121 to reserve seating. Arbor Wealth specializes in portfolio management for investors with $250,000 or more of investable assets.