Fiduciary Standard
A FIDUCIARY STANDARD
What is the “fiduciary standard” of care?
Putting the client’s best interest first.
Acting with prudence – the skill, diligence, and good judgment of a professional.
Providing full and fair disclosure of all important facts.
Avoiding conflicts of interest and fully disclosing situations where conflicts exist.
An advisor with a “fiduciary standard” must place clients into prudent investments.
They cannot lawfully lead clients into high-cost investments without justification – particularly when known lower cost alternatives exist.
A fiduciary standard is superior to brokers’ lower suitability standard – the standard accepted by many major banks.
What is a “suitability standard”?
Knowing the client and their financial situation.
Recommending products that are suitable to their situation.
Brokers with a “suitability standard” may intentionally or unknowingly place clients into higher cost investments that enrich the broker at the expense of the client’s return. This is lawful under the suitability standard.
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