The Fiduciary Standard: Our First and Only Loyalty is to You

The Fiduciary Standard: Our First and Only Loyalty is to You

June 25, 2019

Perhaps lost in the geopolitical shuffle, the Securities & Exchange Commission (SEC) updated rules concerning the relationship between brokers and their clients this week. The SEC says brokers must act in the investor’s “best interests.”

Sounds great. But what does this mean? Perhaps less than you might think.

For one thing, the SEC’s rules cover broker-dealers. Historically, broker-dealers were regarded as, essentially, salespeople. Brokers were free to recommend any investment product to a customer so long as it was “suitable,” that is, it somehow met the customer’s needs—regardless of the investment’s costs or how much the broker would be paid for selling it.

The SEC’s new rules require brokers to recommend products that are in their clients’ best interests to own. But they don’t strictly define what “best interests” means in practice. Instead, they merely require brokers to disclose any potential conflict to customers. And further, the new rule does not explicitly eliminate all of the pay practices that put a broker’s interests ahead of their investors’.

At Adviser Investments, we’ve never felt that brokerage standards were good enough. As a registered investment adviser, we are held to the highest standard: That of being a fiduciary. We’re always required to put a client’s interests before our own, something we’d do even if it wasn’t prescribed. It’s simply the right thing to do.

All of our CERTIFIED FINANCIAL PLANNERTM professionals are also held to the fiduciary standard as well as the CFP Board’s code of ethics—which we think is to the benefit of our clients.

In addition, we work only for you—we receive no commission from the funds we choose to invest in. And we eat our own cooking—Adviser Investments’ retirement savings plan is invested in the same funds found in client portfolios. That means every one of our employees’ interests are aligned with yours. We think that takes the definition of a true fiduciary to an even higher plane.

This material is distributed for informational purposes only. The investment ideas and expressions of opinion may contain certain forward-looking statements and should not be viewed as recommendations or personal investment advice, or considered an offer to buy or sell specific securities. Data and statistics contained in this report are obtained from what we believe to be reliable sources; however, their accuracy, completeness or reliability cannot be guaranteed.

Our statements and opinions are subject to change without notice and should be considered only as part of a diversified portfolio. You may request a free copy of the firm’s Form ADV Part 2, which describes, among other items, risk factors, strategies, affiliations, services offered and fees charged.

Past performance is not an indication of future returns. The tax information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice. We do not provide legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.

Companies mentioned in this article are not necessarily held in client portfolios and our references to them should not be seen as a recommendation to buy, sell or hold any of them.

© 2019 Adviser Investments, LLC. All Rights Reserved.

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