Most of the time I work as a fiduciary and I believe it is a critical piece of what makes our firm trustworthy. I also personally know a number of fine advisors that do not act as fiduciaries. But I believe everyone would choose to work with a fiduciary advisory versus a broker or agent using the suitability standard once they understand the distinction. Which do you prefer? Ask yourself these two questions to find out the answer for yourself!
Do you care if there are hidden conflicts of interest? A fiduciary is required by law to avoid conflicts of interest. Any conflicts that cannot be avoided must be fully disclosed and informed consent obtained from the client. In the traditional sales person/broker/agent relationship using the suitability standard, a conflict of interest can be of common practice and disclosures of conflicts are not required to be provided to the client.
To whom does my advisor owe loyalty? In a fiduciary relationship – the advisor’s first and primary loyalty is by law to the client. In the traditional sales person/broker/agent relationship using the suitability standard, the first loyalty is to the firm and then the client. The advisor is acting as a product sales person for the firm first and foremost.