What is a fiduciary?

You want an advisor you can trust. This begins with choosing an advisor working under a fiduciary level of care.

The fiduciary standard of care requires that a financial adviser act solely in the client’s best interest when offering personalized financial advice.

More information about the fiduciary standard of care is available at the Financial Planning Coalition’s website; here.

As NAPFA members, our Network advisors support the work being done to strengthen and extend the fiduciary standard so that more consumers get better financial advice.

*All members of the Cleveland Financial Advisors Network are proponents of the fiduciary rule and act as true advocates for their client's financial best interests, at all times*

Who follows the fiduciary standard?

The Investment Advisers Act of 1940, states that investment advisers are regulated by the Securities and Exchange Commission (SEC) or appropriate state authorities and are required to provide services to their customers under the fiduciary standard.

CERTIFIED FINANCIAL PLANNER™ professionals providing financial planning services also must abide by the fiduciary standard, as defined by CFP Board.

Broker-dealers are not required to provide services to their clients under the fiduciary standard of care. Instead, broker-dealers simply have to provide services under the “suitability standard of care,” which generally requires only the broker-dealer’s reasonable belief that any recommendation is suitable for the client. 

It is important to recognize that a financial recommendation that is “suitable” for a client (as legally required for broker-dealers) may or may not be a financial recommendation that is in the client’s best interest (as legally required for investment advisers).

Why We Think It's Such a big deal

We see consumers being harmed by the absence of a uniform fiduciary standard that applies to all financial professionals who provide personalized investment advice.

From paying excessive fees and commissions to receiving substandard performance.

Consumers are exposed to even greater and unnecessary risks from products that may be deemed suitable for them but are inferior to other available options and not necessarily in their best interests.

Section 913 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd–Frank Act) directed the SEC to evaluate gaps in existing regulations for investment advisers and broker-dealers when providing personalized advice to consumers. 

As of 2019, the SEC continues to evaluate whether or not to move forward with fiduciary rule-making.

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