OUR FIDUCIARY DUTY
Working with a Fiduciary: Know the difference, and trust who you're working with.
A Registered Investment Advisor, regulated under the Investment Advisors Act of 1940 is a fiduciary. They must follow the “trust” standard — the highest known in law — which requires them to place the interests of their clients ahead of their own and fulfill critical fiduciary duties of trust and confidence.
Under the fiduciary trust standard, a Registered Investment Advisor must provide its best advice to a client.
Stockbrokers are regulated under the Securities Exchange Act of 1934, are governed by the “suitability” standard and are not fiduciaries. The “suitability” standard does not require a stockbroker to place the interests of its clients ahead of its own. Under this non-fiduciary suitability standard, a stockbroker need provide only suitable advice to its clients — even if the stockbroker knows that the advice is not the best advice and he/she benefits from these recommendations more than alternatives that are better for the client
“Financial Advisor” at a brokerage house
“Financial Advisor” at a Registered Investment Advisor (RIA)
In the end, the difference between a stockbroker / registered representative and a Registered Investment Advisor is that the Registered Investment Advisor is subject to the high fiduciary legal standard when providing investment advising services while the stockbroker is not. This could have a significant effect on the quality and composition of your portfolio, the fees that you pay and the eventual performance outcome.