Financial advisors have all sorts of different specializations and services that they offer. In turn, there are a number of certifications they can receive to show off those areas of focus. Some of the most popular ones are certified financial planner (CFP), chartered financial analyst (CFA) and accredited investment fiduciary (AIF). If an advisor is an AIF, it illustrates their knowledge of ethical behaviors that follow a fiduciary duty to their clients.
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What Is an Accredited Investment Fiduciary (AIF)?
The Accredited Investment Fiduciary (AIF) is an ethical certification issued by Fi360. That body is sometimes known by its former name, the Center for Fiduciary Studies.
An AIF has completed Fi360’s course on ethical behavior and fiduciary services. The advisors have learned to balance their business interests against a client-first (or fiduciary) approach.
The AIF credential focuses on improving client service. However, it also aims to make professional life safer for financial advisors. For example, part of the course involves best practices and documentation. That can help financial advisors avoid mismanagement claims by having proper documentation and avoiding conflicts of interest.
This is increasingly essential for financial advisors. In the wake of the Obama-era rule, retail investors are sensitive to fiduciary duty and conflicts.
Requirements for Becoming an AIF
To receive this certification, a financial advisor must complete either Fi360’s in-person training course or its online web program. The cost of that training ranges from $1,600 to $2,000.
They then must pass a final exam and complete six hours of continued education per year. Also, the advisor must attest to a code of ethics written by the institute. The education focuses particularly on Fi360’s Prudent Investment Practices.
What Is Fiduciary Duty?
In 2015 the Barack Obama administration passed a rule through the Department of Labor holding that investment advisors have what is called a “fiduciary duty” to their clients.
In short, fiduciary duty is considered the highest standard of care required by law. Whether you’re an attorney or a financial advisor, it requires you to serve the best interests of your client above all else.
Jobs that require this standard usually require a high degree of specified knowledge. The average person typically won’t be able to understand or refute the advice they’re given by such professionals. These same professionals could also inflict great harm on their clients by acting in their own interests.
These criteria broadly establish the two most common elements of a fiduciary duty: the duty of care and the duty of loyalty.
For example, attorneys owe a fiduciary duty to their clients. Once retained, a lawyer must put the needs of the client first and advise accordingly. A lawyer who ignores that and suggests that her client try a bad case just to run up the bill, for example, could face penalties up to and including disbarment.
Should You Hire an AIF?
No online seminar can instill good ethics in someone. A financial advisor determined to cheat clients and prioritize commissions over sound guidance will do so. However the AIF credential tells you two things that can help in picking an advisor:
- First, they cared enough to get the certificate. Double-cross schemes are rare in the real world. It’s unlikely that a sleazy advisor would go to all the trouble of getting the AIF just to gain your trust. If they have this certificate, they likely care about their ethical duty.
- Second, it shows that they will create a paper trail. The AIF certification teaches documentation best practices. If you ever have questions about your investments, you can ask your advisor to show their work.
Bottom Line
The AIF credential is all about trust, and you have to trust your financial advisor. If nothing else, it’s important to prioritize professionalism. It isn’t always best to trust your money to someone just because they can give you a better deal or happen to live closer to your commute. When it comes to choosing a financial advisor, professionalism and ethics can be the most important criteria.
Also, try to remember that this is your money too. You may want to look into the funds that your advisor recommends. Consider reading up on your investments and understanding exactly what (if anything) your advisor will get out of it. You’ve hired this person, so you’ll want to trust their opinion. But that’s no excuse not to do your own research too.
Investing Tips
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FAQs
An Accredited Investment Fiduciary (AIF), which is a certification administered by Fi360, formerly known as the Center for Fiduciary Studies, is a financial advisor who has mastered specialized knowledge of fiduciary standards of care and how those standards apply to the investment management process.
What is an accredited investment fiduciary? ›
The Accredited Investment Fiduciary® (AIF®) Designation is a professional certification that demonstrates an advisor or other person serving as an investment fiduciary has met certain requirements to earn and maintain the credential.
What is an AIF investment? ›
Alternative Investment Fund or AIF means any fund established or incorporated in India which is a privately pooled investment vehicle which collects funds from sophisticated investors, whether Indian or foreign, for investing it in accordance with a defined investment policy for the benefit of its investors.
What does AIF mean for a financial advisor? ›
Accredited Investment Fiduciary (AIF)
Is an AIF the same as a fiduciary? ›
An AIF has completed Fi360's course on ethical behavior and fiduciary services. The advisors have learned to balance their business interests against a client-first (or fiduciary) approach. The AIF credential focuses on improving client service.
Which is better, AIF or CFP? ›
AIFs give clients peace of mind because their certification displays their devotion to their clients' needs. For clients also looking for the top level of investment and financial planning expertise, CFPs offer unparalleled knowledge and skill.
Is aif a good designation? ›
Fi360 is accredited by the American National Standards Institute for the AIF® Designation, making the designation part of an elite group of accredited designations for financial professionals.
Is it safe to invest in AIF? ›
According to SEBI, Alternative Investment Fund is for sophisticated investors. The risk involved is considered to be fairly high in these funds. However, when invested for a long period of time, the returns can also be higher. There is flexibility, in terms of strategies, timing, hedging of derivatives, etc.
Is AIF better than mutual fund? ›
High ROI vs Low risk
AIF products are not directly linked to the stock market. Hence, they do not see massive fluctuations, making them relatively low-risk investments. Mutual funds, on the other hand, are subject to market risks, making them riskier.
How does the AIF work? ›
Alternative Investment Fund or AIF is a privately pooled investment vehicle that invests in alternative asset classes such as private equity, venture capital, hedge funds, real estate, commodities, and derivatives.
Whether AIFs are better than mutual funds depends on individual investor preferences, risk tolerance, and financial goals. AIFs offer exposure to alternative assets and may potentially provide higher returns but often come with higher risks and may require larger investments compared to mutual funds.
How long does it take to get an AIF? ›
The AIF Designation
The training can be completed via an instructor-led virtual course, which includes five two-hour sessions, or an online self-paced program that can be completed over 180 days.
How does one become a fiduciary? ›
State requirements: In order to become a fiduciary, most states require a certain amount of professional experience. For example, your state might require you to have a degree and five years of professional experience, or 10 years without a degree. You'll want to confirm your state's requirements to meet the criteria.
How can I tell if my financial advisor is a fiduciary? ›
1 – Ask them directly: A genuine fiduciary will straightforwardly affirm their role and commitment to act in your best interests. 2 – Review the advisor's credentials: Certifications such as CFP® (Certified Financial Planner) or AIF® (Accredited Investment Fiduciary) often indicate a fiduciary standard.
What are the 4 fiduciary funds? ›
This Statement describes four fiduciary funds that should be reported, if applicable: (1) pension (and other employee benefit) trust funds, (2) investment trust funds, (3) private-purpose trust funds, and (4) custodial funds.
Is AIF debt or equity? ›
. Each category of Alternative Investment Fund shall have its own set of investment conditions as well. Category I AIF and Category II AIFs are required to 'primarily invest' in unlisted securities. 'Debt funds' defined to be AIFs which primarily invest in debt securities are categorized as Category II AIFs.
Who is an investment fiduciary? ›
An investment fiduciary is anyone with legal responsibility for managing somebody else's money, such as a member of the investment committee of a charity. Registered investment advisors and insurance agents have a fiduciary duty to their clients.
What qualifies you as an accredited investor? ›
Who Qualifies to Be an Accredited Investor? An individual with gross income exceeding $200,000 in each of the two most recent years or joint income with a spouse or partner exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year.
What is the difference between a fiduciary and an investment advisor representative? ›
An investment advisor representative's main tasks include: Offering advice about different securities. IARs research and compare investments for their clients. As fiduciaries, they make recommendations with the clients' interests in mind.
What is the difference between a CFP and a fiduciary? ›
Financial advisors are required to provide suitable recommendations that align with the client's needs and risk tolerance at the time of recommendation. Fiduciaries, on the other hand, have a legal obligation to act in the client's best interest at all times.
