Fiduciary

Our engagement with you is as your investment adviser.  Under the SEC rules, we act as your fiduciary: providing discretionary portfolio management and financial planning advice for a fee, usually based on the assets we are managing for you (though for very complex planning additional fees may apply).   Assets we manage for you are held at third-party custodians - TD Ameritrade, Schwab and other custodians as needed. We do not charge commissions for these services, however, your custodian may charge a small commission and service fees for certain types of transactions, like options trading and holding alternative assets in your account.  We never receive financial compensation from third party custodians related to your accounts or your transactions.

Many of our clients occasionally require help with insurance or own existing insurance products that require monitoring and service.  We maintain insurance licenses to be able to offer service and solutions to our clients for risk management needs, including life, disability, long-term care insurance, and longevity risk.  When these needs arise, we may by necessity provide you a commissioned insurance product.  

As a consumer, it can be nearly impossible to differentiate between financial professionals who are putting your interests first - or acting as your fiduciary - and those who are not.  In fact, a host of government and industry regulatory agencies are struggling to refine the rules and definitions around when your financial professionals must act as a fiduciary, and how they must disclose their relationships and conflicts of interest, while providing you financial products and advice. 

Broadly speaking, financial professionals provide services and products under three different regulatory systems - the SEC, FINRA and state insurance departments. Financial professionals usually operate under one or more of these regulators, though most are licensed with two if not all three of the major regulators.  It is possible for financial professionals to be regulated directly by their state government if their activities fall below a certain threshold, so it's wise to ask anyone involved in helping you with your money these questions:

1. What licenses and registrations do you and your staff hold?
2. Which regulators supervise your work?
3. How are you compensated?
4. Are you a fiduciary?  When are you not acting as a fiduciary?

Investment Advisers’ Fiduciary Duty

The final recent interpretation by the SEC reaffirms the special relationship of trust and confidence an adviser has with its clients. As fiduciaries, investment advisers have an overarching duty to act in clients’ best interests, as well as the affirmative duties of care and loyalty. Investment advisers must make full and fair disclosure of their conflicts of interest and ensure that their conflicts do not taint their advice. These standards – affirmed by the Commission -- have served investors, the capital markets, the economy, and our profession well for decades and will continue to do so.

Specifically, the SEC articulates the adviser’s fiduciary duty in the Interpretation as following:

An adviser’s fiduciary duty means the adviser must, at all times, serve the best interest of its client and not subordinate its client’s interest to its own. In other words, the investment adviser cannot place its own interests ahead of the interests of its client. This combination of care and loyalty obligations has been characterized as requiring the investment adviser to act in the ‘best interest’ of its client at all times. In our view, an investment adviser’s obligation to act in the best interest of its client is an overarching principle that encompasses both the duty of care and the duty of loyalty.”

Citation: Investment Adviser Association 9/01/2019

Click here for more information from FINRA on types of investment professionals.