What is the fiduciary standard and why is it important to you?

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Undoubtedly, you are seeing the word fiduciary being thrown around a lot lately. So what exactly is the fiduciary standard, what does it mean to you as an investor, and how do you know if the financial professionals you work with are required to uphold it?

Let’s simply begin with a definition taken right from the Investopedia website:

“Essentially, a fiduciary is a person or organization that owes to another the duties of good faith and trust. The highest legal duty of one party to another, it also involves being bound ethically to act in the other's best interests.”

What does this mean to you as an investor? It means that when you enter into an agreement with an investment adviser who is required to uphold the fiduciary standard, that adviser should never offer you a product or service if it is not the best option available to meet your needs. Financial advisors acting as fiduciaries must disclose any and all potential conflicts of interest that could influence their recommendations to you.

What is the difference between the Fiduciary and the Suitability Standard?

At the moment, not all investment professionals are required to act as fiduciaries. The Department of Labor will soon be implementing a new rule, however, that will require all investment professionals who give retirement planning advice or who work with retirement plans to act as fiduciaries. For now, many institutions are only upholding what is called a suitability standard, meaning they can sell investment products they deem “suitable” for clients even if those products do not serve the client’s best interest.

Heron Wealth is a Registered Investment Advisory, and as an RIA we are required to uphold the fiduciary standard. As a fee only institution, we do not receive commissions for any of the products our clients are invested in, so we can make unbiased recommendations. Additionally, as a CERTIFIED FINANCIAL PLANNER™ I am required to act as a fiduciary whether I work for an RIA or not. This means that my clients’ success comes first. Whether it’s by helping them pay off their debt, reallocate their 401K investments, or open a 529 account to save for their child’s college education, I love knowing that every day I get to help people move another step closer to their goals.

 
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Do you have more questions?
Feel free to contact me

Samantha Gorelick, CFP®
SamanthaGorelick@HeronWealth.com
Direct: (347) 580-5285