Understanding the Fiduciary Standard

The fiduciary standard is a legal obligation that requires a financial adviser to act in their client's best interest at all times — ahead of their own interests or their firm's interests. It is distinct from the suitability standard, which only requires that a recommendation be suitable for a client, not necessarily optimal.

Registered Investment Advisers (RIAs) are held to the fiduciary standard by the SEC under the Investment Advisers Act of 1940. Broker-dealers, by contrast, are regulated under a different framework. This distinction has practical implications for how advice is given, how advisers are compensated, and how conflicts of interest are disclosed and managed.

For educational purposes. Registration as an investment adviser does not imply a certain level of skill or training.