A fiduciary is legally obligated to act in the best interest of the person or entity they are representing. In other words, they have a fiduciary duty or obligation to their client. In the world of financial advisors, only independent Registered Investment Advisors have fiduciary responsibility.

Types of Financial Advisors

Fee Only Advisor

What to Seek in a Financial Advisor

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Annuity Digest Buying Guide: What to Seek in a Financial Advisor
  • Objectivity: Does the information provided to you appear to be in your best interests and be free of any conflicts of interest?  Is the advisor open to discussing products and solutions that may fall outside of their area of focus and expertise if it makes sense for you?  The fiduciary question is a good starting point.

The Importance of a Fiduciary

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Annuity Digest Buying Guide: The Importance of a Fiduciary

A fiduciary is someone who is legally required to act in the best interests of their customer.  This means that your financial well-being is the number one priority for a financial advisor who is a fiduciary.

Some—but certainly not all or even most—financial advisors are fiduciaries.

Keeping an Eye on Fiduciary Status

The proposed regulation that could expand fiduciary status to a broader set of financial advisors appears to be pending in Congress.

The Dodd version from the Senate Banking Committee would potentially extend fiduciary status to broker-dealers and registered representatives.  Broker-dealers are currently exempt from the Investment Advisers Act which defines fiduciary status.

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House Bill Would Apply Fiduciary Status to Annuity Sales

The House Financial Services Committee passed the Investor Protection Act of 2009. This legislation would have a meaningful impact on the sales of annuities and mutual funds as the current suitability standard would be replaced by a much higher fiduciary standard. The net effect would be a big win for financial services consumers. Currently, suitability standards require that financial advisors determine whether a product is appropriate for a given client profile, with risk tolerance as one of...