Financial Professionals operate as either fiduciaries or salespeople. Fiduciaries have a legal duty to give advice that is solely for your benefit and in your best interest. Fiduciaries must put their own personal interests completely aside, in order to remain loyal to their fiduciary duty. On the other hand, salespeople are held to a suitability standard, which states that they must have reasonable grounds to believe that an investment is suitable for you. Salespeople have no obligation to work in your best interest, disclose any conflicts of interest, or inform you of commissions on the investment products they sell.
Simply put, fiduciaries have a duty to act in their clients best interests while salespeople have a duty to act in their employer’s best interest. These differences in care should matter greatly to you because they could determine whether or not you receive optimal financial planning and investment management advice. Learning how your advisor operates might seem like a challenging task, but it doesn’t have to be. To learn more, explore the articles below.
US NEWS & World Report- Is your Financial Advisor a Fiduciary?
Investopedia-Suitability vs Fiduciary Standards
MarketWatch- Why your Financial Advisor should be a Fiduciary