What is a Fiduciary?
As a Registered Investment Advisor (RIA) we have a fiduciary obligation to our clients. As a fiduciary we have a legal obligation to act in our client’s best interest. This means we are legally bound to look out for your interests and to disclose conflicts of interest. Unfortunately, not all firms understand their obligations and many don’t disclose all conflicts of interests.
Throughout the financial services industry there are different fiduciary responsibilities that an advisor may be held to. Registered Investment Advisors have legal obligations enforceable by law. Alternatively, brokers from big Wall Street firms or insurance companies do not have legal responsibilities to look out for your best interests. They are merely required to ensure proper disclosure. Brokers may have fiduciary responsibilities from designations they carry or trade groups and could lose such affiliations for breaching their obligations but they are not held to a legal duty.
Tips for assessing fiduciary standards:
- Look for an independent Registered Investment Advisor. An independent Registered Investment Advisor does not answer to anyone other than the client. This means there is no home office, franchisor, or third party in the picture
- Ask about possible conflicts of interest
- Ask about how the advisor is compensated
