Fiduciary vs. Suitability Standard
Currently, many advisors and broker-dealers operate under the suitability standard of The Investment Advisers Act of 1940. In contrast to the best interest standard, the suitability standard merely requires that advisors ensure an investment or recommendation is “suitable” for you, but not necessarily in your best interest.
FIDUCIARY STANDARD
- Put your best interest first
- Act with prudence
- Provide full disclosure
- Avoid conflicts of interest
- Fully disclose and fairly manage, in your favor, unavoidable conflicts
SUITABILITY STANDARD
- Understand your financial situation
- Be aware of your investment experience
- Know your investment objectives
- Recommend products and give advice suitable to your circumstances