What is a fiduciary?
The fiduciary standard was established as part of the Investment Advisors Act of 1940. The U.S. Securities and Exchange Commission (SEC) holds Advisors to a fiduciary standard that requires them to act in the best interest of the client – specifically stating that they must put their clients’ interests above their own. The fiduciary standard also dictates that the Investment Advisor must divulge any possible conflicts. Similar to a doctor’s Hippocratic Oath, the fiduciary standard holds an Investment Advisor to an ethic and to honest regulation.
Why is it important to chose a fee-based investment advisor?
Argent Wealth Advisors, LLC is registered with the California Department of Business Oversight as an investment advisory company. As such, the firm is held to the fiduciary standard in all of its dealings with its clients. As a fiduciary, Argent Wealth Advisors has a “duty to care” and must continually monitor not only a client’s investments, but also their changing financial situation.
What is the difference between an advisor and a broker?
While an investment advisor is held to a fiduciary standard, a broker is held to a suitability standard. The suitability standard only details that a broker has to reasonably believe that any recommendations made are suitable for clients. The suitability rule does not set standards around conflicts of interest or a need to place clients’ interests before one’s own. The fiduciary standard requires a higher standard of care and is more stringent than the suitability standard. As a result, many believe the suitability rule leaves room for conflicts to arise between a Broker and client, especially around the payment of commissions for products sold.
Contact us to learn more about the importance of the fiduciary standard of care.
Contact us to learn more about the importance of the fiduciary standard of care.