.png)
.jpg)
Are you a Fiduciary? — This word is thrown around so much these days. Whether it is due to the Department of Labor Rule from a few years ago or the growing trend of financial advisors leaving large broker dealers in masses and becoming independent fiduciaries. Whatever the reason for the heightened awareness, I get the question from just about every client and potential client: The interesting part is that more than half of those asking do not fully understand what a fiduciary really is. So, let’s take a step back and dig into what this word really means.
What exactly is a Fiduciary?
By definition, a fiduciary is a person or company that has the power to act on behalf of someone else. This is the highest standard of care that requires being bound ethically to act in the other’s best interests. So, when you’re talking about a financial advisor being a fiduciary, that means that by law they are required to act in the best interest of their client and avoid conflicts of interest.
If someone isn’t a Fiduciary, what are they?
The other standard the financial services industry goes by, is called the Suitability Standard. If a financial professional doesn’t follow the fiduciary standard, it’s likely they follow the suitability standard – which states that if two products (or investment solutions) are both right for a client, the financial professional can recommend the one that pays them more money (or a higher commission). The suitability standard requires that a broker make recommendations that are suitable based on a client’s personal situation, but the standard does not require the advice to be in the client’s best interest.
Solutions just have to fit your needs, instead of being what’s best for you. Michael Kitces said it best, “Suitability means selling a suit that fits you. Fiduciary means it actually has to look good on you, too.” For a deeper look, check out our Free Financial Guide; The Importance of a Fiduciary.
Our firm operates as a fiduciary for our clients and we work to remove all conflicts of interest. Learn more about who we are.
Registered Representative of Sanctuary Securities Inc. and Investment Advisor Representative of Sanctuary Advisors, LLC.– Securities offered through Sanctuary Securities, Inc., Member FINRA, SIPC. – Advisory services offered through Sanctuary Advisors, LLC., an SEC Registered Investment Advisor. – Theorem Wealth Management is a DBA of Sanctuary Securities, Inc. and Sanctuary Advisors, LLC. This communication has not been reviewed for completeness or accuracy, does not necessarily reflect the views of Sanctuary Securities, Inc. or Sanctuary Advisors, LLC., and is not a recommendation or endorsement of any product, service, or issuer. Third party posts do not reflect the views of Theorem Wealth Management or Sanctuary Securities, Inc. or Sanctuary Advisors, LLC., and have not been reviewed for completeness and accuracy. All further communications from this representative must be sent from and received by johnathan@theoremwm.com. For additional information, please refer to one of the following consumer websites: www.FINRA.org, www.SIPC.org.
