“Find A Financial Adviser Who Will Put Your Interests First”

“…If you want financial advice there are two things you should be aware of: First, the quality of the advice you receive varies widely…It is as true for financial advice as it is for any product or service you may buy or otherwise consume. The second point: There are two completely different standards (for financial advisors)-they are governed by two wholly different sets of regulations: The two standards are “suitability” and “Fiduciary”. People who operate under the suitability standard typically are called “brokers”, but they also go by the name registered representative-or, on their business cards, vice president…People who adhere to the fiduciary standard are called registered investment advisors…Fiduciaries have a much stricter duty and legal obligation than do those who operate under suitability rules.

…The Securities and Exchange Commission…recommended that all financial advisers be placed under a uniform fiduciary standard. Wall Street was not happy about this, and spent tens of millions of dollars lobbying to prevent the higher standard from becoming the law of the land.

The fiduciary standard legally obligates the registered investment adviser to act at all times for the sole benefit and interest of the client.

In contrast, the suitability standard is far more complicated-and offers much less protection to investors. .. all that matters is that the investor is “suitable” for a particular product. This is true regardless of how expensive that product might be or how much of a dog the investment is.

…The ordinary individual investor has three problems with the suitability standard:
1. It favors the brokerage firm and its employees over the investor.
2. It costs much more than services provided under other standards.
3. And it creates an inherent conflict of interest between the adviser and the investor.

…Any time the client’s best interest is not the focus, what occurs instead is the opportunity to “max out” the revenue each client generates…Any mention of the word “fiduciary” generates a furious lobbying campaign by Wall Street. That ought to give you an idea of exactly how loose and lucrative the suitability standard is. Fiduciary rules protect investors from adviser malfeasance, while suitability rules protect brokers from investor lawsuits.