AREN'T ALL FINANCIAL ADVISORS FIDUCIARIES?

In a word, "Nope." 

According to the Cornell University Law Dictionary, “a fiduciary duty is the highest standard of care.” It entails acting always in your best interest, even if it is contrary to our own. 

In practical terms, this means that a financial advisor licensed as a fiduciary - like us - are legally obligated to only recommend investment products that are the best option for you. This is the highest legal standard in the financial industry and is one that we wholeheartedly embrace as it naturally flows from our core values. 

In acting in your best interest, a fiduciary has two main duties: the duty of care and the duty of loyalty. 

Duty of Care. Under the duty of care, a fiduciary must make informed decisions only after he or she has reviewed the available information. We fulfill this by taking a comprehensive look at your financial life before making recommendations or plans. 

The duty of care also means that our obligation to you extends beyond the first or second meeting. As a fiduciary, we continually monitor our client’s investments and financial situation and adhere to best practices of conduct through the duration of our relationship. 

Duty of Loyalty. Under the duty of loyalty, a fiduciary cannot put their interests before their clients and must avoid any conflicts of interest that influence how the client is treated. 

In practical terms, our investment and other recommendations are made because they benefit you and not us. 

Although anyone can legally call themselves a financial advisor and offer financial advice, only fiduciary financial advisors are required – by law – to place your best interest over their own. 

Suitability Standard. Generally speaking, financial advisors who work for brokerages are not fiduciaries but are held to the lesser legal standard of care called the “suitability” standard. This means they can "sell" you products that might be alright for you, or "suitable" for you, but not necessarily in your best interest. It's like being sold a mini-van (a vehicle "suitable" for your large family) instead of an SUB (a vehicle that is really best for you). 

To make things even more confusing, many people in the financial industry have what is a called a "hybrid" practice. This means that at times they will do what is "suitable" for you while at other times they will do things that are in your "best interest." The problem is that you may not know which hat they are wearing when they make their recommendations.