FIDUCIARY STANDARD VS. SUITABILITY STANDARD
Held to a strict Fiduciary Standard we are required by law to act in the best interest of our clients at all times.
Many financial advisors and insurance representatives are held only to a Suitability Standard. A Suitability Standard states that a broker only needs to check the suitability of a prospective buyer, based primarily upon financial objectives, current income level and age, in order to complete a commissionable sale of a financial product. In a way, the Suitability Standard may simply measure how much financial product can be sold to an investor. Furthermore, the Suitability Standard does not require the disclosure of possible conflicts of interest. Common differences between the two standards may involve trading commissions such as commissions and incentives paid by mutual fund companies back to the broker dealer.
In contrast, a Fiduciary Standard is the highest standard of accountability in the financial services industry. The Fiduciary Standard requires advice to be provided in the best interests of the client including the disclosure of possible conflicts of interest.