Financial adviser as fiduciary
originally posted: 11/22/2006 reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If you notice an error or are in doubt, please send a new question by email or ask for an update. Email asktony@tonynovak.com.
Q: What does the term fiduciary mean in your financial adviser interview form?
A: The term "fiduciary", when referring to a financial adviser, is a legal term referring to a person who is required to act in the client's best interest. Many people are surprised to learn that the vast majority of financial advisers are not required to act in their client's best interest. An adviser who is affiliated with a brokerage firm, for example, is legally expected to act primarily in the best interest of the insurance company as long as the actions do not hurt the client. The Securities Exchange Commission is drawing attention to this issue in order to differentiate financial advisers who are independent from those who are primarily sales representatives. This issue is one of the topics the interview worksheet suggests that should be considered when choosing a financial adviser.
Summary
More resources:
"Interview the Financial Adviser" worksheet