Our Fiduciary Role Explained

In the financial world today, there are basically two types of advice available to investors: that given by stockbrokers and that given by Independent Financial Advisors. Unfortunately, many investors don’t know the difference between the two kinds of advice. In fact they may not even be aware a difference exists.

 

A “fiduciary” is defined as one who is in a position of authority who obligates himself (or herself) to act on behalf of another and assumes a duty to act in good faith and care, candor, and loyalty in fulfilling its obligations.

 

The truth is there’s considerable confusion in the investment community regarding financial advice and the people who dispense it. Financial advisors have a fiduciary duty to act in the best interests of their clients at all times. Brokerage firms generally are not fiduciaries to their customers, and therefore may not make decisions that are solely in their customers’ best interests. In the past you may have heard of a brokerage firm recommending a client buy a particular investment at the same time telling another to sell it. Legally they can do this. They are not held to a fiduciary standard with their clients. 

 

Financial advisors manage money in the best interests of their clients. They do not engage in business activities like investment banking or underwriting which brokerage firms do. These other businesses may cause a brokerage firm’s interest or attention to focus on other areas of the firm outside of their retail brokerage business and customers. A fiduciary has only one person’s interest in mind, their client’s.

 

Independent Financial Advisors are held to a higher standard when it comes to putting investors’ interests first and doing the right thing for their clients.

 

We have a fiduciary duty to our clients.