Our Fiduciary Standard How the Fiduciary Standard Protects YouHow advisors are compensated does not determine their character, but it may influence their behavior. Unfortunately, an advisor's business structure and compensation model can make it difficult to avoid conflicts of interest and to provide objective financial advice. The majority of the public does not understand the two competing standards under which financial advisors operate: the fiduciary standard and the suitability standard. Failing to understand this difference can potentially have negative financial consequences. Fiduciary StandardFiduciaries are individuals you hire to act in your best interest. Examples of fiduciaries include physicians, accountants, and attorneys. In the investment industry, independent Registered Investment Advisors (RIAs) are also fiduciaries, which means they are held to a strict fiduciary standard by law. They are regulated by the state in which they do business or by the Securities and Exchange Commission (SEC). A financial advisor embracing the fiduciary standard occupies a position of special trust and confidence when working with a client. As a fiduciary, the financial advisor is required to act with undivided loyalty to the client. This includes disclosure of how the advisor is to be compensated and any corresponding conflicts of interest. RIA's generally charge a fee for their advice rather than commissions because commissions entail an inherent-conflict of interest. In short, RIAs are legally required to put their clients' interests ahead of their own. Suitability Standard Under current law, broker dealers, independent advisors aligned with broker dealers, and many insurance salespersons are regulated by FINRA and are held to a lower standard known as "suitability." The "suitability standard" only requires that the investment products they sell are "suitable"—not necessarily optimal—for their clients. For example, a broker/advisor could sell you the investment that pays the highest commission, as long as the investment is deemed "suitable." They are not required by law to disclose potential conflicts of interest. Advisors operating under the suitability standard are often paid a commission for products they sell or a they are paid a combination of fees ("fee-based") and commissions, which entail an inherent conflict of interest between the advisor and the client. A note on "Dual Registration": Many firms, including the major "big-name" firms, are "dually registered" as investment brokers as well as Registered Investment Advisors. We believe this causes confusion as to when the advisor is working in your best interest under the fiduciary standard, and when the advisor is acting under the lesser suitability standard. We believe our clients should work with a financial advisor who ALWAYS acts as a fiduciary.Ask one simple question: "Are you acting under the fiduciary standard when recommending investments, and will you put that in writing?"