Do all financial advisers have your best interests at heart?

By now the long-awaited, much-debated Fiduciary Standard has been implemented.  Kind of.  Ish.

After lots of pushback from some parts of the financial planning industry and the new powers in Washington, members of the financial services community now have to put their clients’ interest above their own (some of the time) when giving investment advice.

Surprised that wasn’t always the case?

It’s true that for many decades, those in the business of selling financial products have only been required to meet a “suitability” standard.  In other words, if they sold you an investment or insurance product that generally fit your needs, but wasn’t the best product for you for the best price, that person was operating within the rules.  An adviser who is an investment broker or insurance salesman typically will adhere to the suitability rules.

A Registered Investment Adviser is required to interact with clients as a Fiduciary.  This means that his/her advice must be (to the adviser’s knowledge at the time) the best fit for the client at the best price.  The commission or fee paid to the adviser for the advice cannot come into the equation.

A game changer.

The new rules insist that financial service providers ALL act as fiduciaries. But here’s the kicker:  The Fiduciary Standard only applies to retirement accounts.  That’s right, your joint, individual, or trust accounts are still subject to the old suitability rules if your financial adviser is not a Registered Investment Adviser.

To cut to the chase: You as a consumer, want advice based on the Fiduciary Standard.  You want advice and investments based on your best interest, not your adviser’s.  AND you want that higher level of care on all of your accounts, not just the retirement assets.

So, ask your adviser if they treat you with the care of a fiduciary.  If the answer is no, or seems vague, keep looking.