Fiduciary vs. Suitability

Who is held to a FIDUCIARY standard of care?

Currently, only independent Registered Investment Advisors are required to act in a fiduciary capacity. The law requires that the advisor act solely in the best interest of the client, even if that interest is in conflict with the advisor’s financial interest. Registered Investment Advisors held to the fiduciary standard must also disclose any conflict, or potential conflict, to the client prior to and throughout the engagement. Additionally, the advisor must adopt a Code of Ethics and fully disclose how they are compensated. Moore Financial Strategies adheres to the highest Fiduciary standards.

Who is held to a SUITABILITY standard of care?

Brokers or “financial advisors” (aka Registered Representatives) working for a broker dealer firm or an insurance company are only held to the suitability standard. The suitability standard, by contrast, requires brokers to recommend investment products that are “suitable,” based on the information provided by the client. There is no requirement that the recommendation must be in the client’s best interest. Also, conflicts of interest need not be disclosed.


 

It’s important to fully understand your relationship with the person handling your investments or providing you financial advice. We suggest that all investors ask their advisors if their advice is subject to the fiduciary or suitability standard.

Our firm is, and always has been, built on what is best for the client. Our advocacy of – and adherence to – the fiduciary standard of care is confirmation of that unwavering commitment.