The world of financial advice is very complex, and most of it is unnecessary in our opinion. One of the most complex issues is the standard that each Financial Advisor uses when they provide advice. The quick take is that a Fiduciary Advisor has to put the client’s best interest first and provide advice with that in mind. While a suitability advisor and the standard they follow is lower, they ensure sure the advice fits the client, it is not hurtful but that doesn’t mean that it is the best advice for you.
In simple terms, the suitability standard is also used by a broker where the broker can provide details about the financial product and help make sure it’s good for you, but they have no obligation to check all available choices and see what’s best for you. A fiduciary has such obligation and that is why they offer a much higher standard of care. A fiduciary is a Registered Investment Advisor (RIA), like InvestEd, that is registered either with the State or the SEC to provide investment advice and has to provide to the client a brochure (known as a ADV form) where all the details about the business, operations, services and fees are clearly explained. In a broker/suitability situation most of the fees are not known to the client, as brokers are usually compensated by commissions or other third parties. Lastly, the conflicts of interest are higher under a suitability standard as the broker’s incentives are more aligned with their firm rather than providing the best advice to their client.
More and more people are understanding that having a fiduciary advisor that looks for your best interests is key and one of the first things to find in an advisor. We’re biased on that as we’re a fiduciary advisor, but do your own research and we believe you’ll come up with similar results, realizing that you’d want your advisor to be on the same side of the table as you.