These days, it seems like everyone is in the business of offering financial advice; Banks, Accountants, Attorneys, and Insurance companies, just to name a few. Most people have no idea on how to differentiate between these choices and where to get good advice. So where’s a consumer to start? A good foundation is understanding ‘Suitability’ vs. ‘Fiduciary’ Advice.
So let’s take a look at both:
The ‘suitability’ standard is defined as determining whether an investment product or strategy is "suitable" for the investor based on his or her financial and risk objectives. Many advisors operate under the suitability standard where the advisor simply determines whether a recommended product or strategy is suitable for the client, not necessarily what is best for them.
Think about this for a moment. In most cases, doesn’t your plumber, electrician, and auto mechanic provide you with all possible options? Shouldn’t you want, or better yet, expect the same when it comes to your finances?
With that being said:
A "fiduciary" who manages an investor's assets has a legal and ethical obligation to put the investor's interests first. That means taking all of the possible options and helping the investor make decisions that are in his or her best interest.
As a Registered Investment Advisor (RIA), we adhere to the fiduciary standard, and we believe this model of disclosure and transparency is in your best interest. In our view, you deserve to have your needs put first and the strategies and investment products we recommend should align according to those needs.
Simply put, the real difference between ‘Suitability’ and ‘Fiduciary’ is that one is for an advisor, the other is for a salesman. We are not just selling you a product, we have to make sure it looks good on you.
So the next time someone gives you any kind of financial advice, ask yourself are they a fiduciary? Or better, yet ask them directly, are you a fiduciary?
Visit the FSC Wealth Advisors Resource Page to learn more about ‘How Our Fiduciary Standard Protects You.