Fiduciary or Suitability Standard?

September 14th, 2015 Posted by Investment Strategy, NAPFA 0 thoughts on “Fiduciary or Suitability Standard?”

I am proud of my firm’s fiduciary status as a Registered Investment Advisor. By choice and by legal requirement, unlike brokers who only adhere to a suitability standard, OpenCircle always acts in the best interest of our clients, both individuals and retirement plans. We work on a fee-only basis, which means we do not earn or charge commissions on investment transactions.

Not only do my firm and I uphold the fiduciary standard, we also stay away from actively managed investment funds. We are dedicated to keeping our clients’ costs down. We help them create an investment plan and stick to it. We believe in rebalancing a client’s portfolio in order to adhere to their written investment plan. In this way, we keep costs down while harvesting tax benefits.

The suitability standard to which brokers are held allows for conflict of interest. Brokers can recommend the purchase of investment products that help them make money, at your expense. They also can make money every time they make a trade on your behalf. It serves their interests to advise you to buy and sell. Naturally they want to protect their way of doing business.

The U.S. Department of Labor has proposed a rule that would require a fiduciary standard. My Registered Investment Advisor peers and I applaud this effort. It comes as no surprise that lobbyists for non-fiduciary providers are strongly opposing the proposal.

Our Director of Investor Advocacy through the BAM ALLIANCE, Dan Solin, explains the importance of avoiding conflicts of interest in working with your advisor. He explores how providing conflicted advice is big business and harms investors while enriching firms and brokers. Read Solin’s The Fiduciary Rule: The Real Agenda in the Huffington Post.

Learn how OpenCircle’s business model serves your best interest.

[Photo credit: Lending Memo]