Excerpt from article from Bloomberg June 16,2011.
"The J.D. Power report also found that 85 percent of full- service investors haven’t heard of or don’t understand the difference between a fiduciary and a suitability standard. Brokers generally are held to a suitability standard that calls for advice that meets their clients’ needs when a product is sold, instead of the fiduciary duty followed by registered investment advisers to put their clients’ best interests first."
This is an unfortunate but seemingly true fact. Most individuals working with a commission broker such as Merrill Lynch and the like do not realize that BY LAW, these firms do not have to act in the best interest of their clients, but only have to "meet" their clients needs when a "product is sold". Firms like ours, that is an RIA (Registered Investment Advisor) HAVE TO BY LAW always act in the best interest of our clients in terms of fees, conflict of interest, investment suitability and so on. It always surprises me when I hear stats that show that most investors have no idea what and if there is a difference between a RIA and a Broker. Its our jobs as RIAs to educate people about the difference, so that clients can make an informed and wise decision about what type of firm is given the privilege to manage their investments.
"The J.D. Power report also found that 85 percent of full- service investors haven’t heard of or don’t understand the difference between a fiduciary and a suitability standard. Brokers generally are held to a suitability standard that calls for advice that meets their clients’ needs when a product is sold, instead of the fiduciary duty followed by registered investment advisers to put their clients’ best interests first."
This is an unfortunate but seemingly true fact. Most individuals working with a commission broker such as Merrill Lynch and the like do not realize that BY LAW, these firms do not have to act in the best interest of their clients, but only have to "meet" their clients needs when a "product is sold". Firms like ours, that is an RIA (Registered Investment Advisor) HAVE TO BY LAW always act in the best interest of our clients in terms of fees, conflict of interest, investment suitability and so on. It always surprises me when I hear stats that show that most investors have no idea what and if there is a difference between a RIA and a Broker. Its our jobs as RIAs to educate people about the difference, so that clients can make an informed and wise decision about what type of firm is given the privilege to manage their investments.
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