Lately I’ve seen a slight increase in ads with advisers / actors touting how much you can trust them because they are fiduciaries. This means (or at least is meant to mean) that the financial advisor is legally obligated to put your interests first, even beyond the commission they receive from selling you financial products that may or may not match your interest. your financial and family situation. goals.

Registered investment advisory firms and their advisers are regulated by the United States Securities and Exchange Commission and have a legal and ethical obligation to act in your best interests while investing and managing your assets. It becomes difficult when even these reputable financial advisers are also registered with a broker who trades on your behalf – and collect commissions in the process.

Brokers and their agents are regulated by FINRA and are not always trustees. They are subject to a lower standard known as the “fit standard”. The fit standard only requires that the broker (and agents) reasonably believe their recommendations / products are suitable for the client. In a dispute, being legally obligated is quite different from simply “believing”.

For example, a brokerage agent might say, “This financial product seems to be suitable for client X, and I reasonably think it would be, so I can sell it to him and collect my commission.”


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