Broker-dealers are regulated by the SEC, but they are not required to be fiduciaries. Rather, they are held to the “suitability standard”—they only have to prove that an investment is suitable for their client at the time of its purchase, not that the advice was in the client’s best interest. Broker-dealers typically earn a commission on sales of investments.

The fiduciary advisor boom may be just around the corner, and prosperity may be awaiting those who can meet the selection criteria for this position, and subsequently to capitalize on it. The possible market base for fiduciary advisors includes all the 100 million households in the U.S.—quite a large base to draw from by any standard. Financial planners who are looking for a new way to grow their practices should investigate this possibility immediately.

For more leads, check the National Association of Personal Financial Advisors (NAPFA). These planners are fee-only, which means their only revenue comes from their clients. They accept no commissions at all and pledge to act in their clients’ best interests at all times. In many respects, NAPFA standards meet or surpass the requirements needed for a CFP credential.
 Broker-dealers are regulated by the SEC, but they are not required to be fiduciaries. Rather, they are held to the “suitability standard”—they only have to prove that an investment is suitable for their client at the time of its purchase, not that the advice was in the client’s best interest. Broker-dealers typically earn a commission on sales of investments.
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All investment advisors registered with the U.S. Securities and Exchange Commission (SEC) or a state securities regulator must act as fiduciaries. Broker-dealers, stockbrokers and insurance agents are only required to fulfill a suitability obligation. This means that while they must provide suitable recommendations to their clients, they don’t have to put their clients’ interest before their own.
Of course, the fiduciary advisor will have to meet the professional standards of prudence, loyalty and adequate asset diversification, as well as compliance with all ERISA regulations. The clients' best interests must always come first when making any recommendation, although possible benefits to the fiduciary advisor and/or the employer may also be considered, as long as they are subordinate to the needs of the employee.

What services will the fiduciary advisor provide to employees? Will the advisor provide simple retirement plan advice, or will comprehensive financial planning also be included? Is it appropriate to also offer other financial products and services to employees; things like mortgage advice, income tax planning and preparation, and estate planning? If so, how will these services be charged for and compensated? Will the employer foot the bill for all services, or will some services be considered ancillary benefits that come at an extra cost to the employee?
Fiduciary duty is important for guiding the actions of the professionals who deal with clients’ money. It’s also important because, when violated, it provides an avenue for legal action. If a financial professional who isn’t a fiduciary has been knowingly selling you low-performing, high-fee investments, you don’t have the legal standing that you would have if the professional were a fiduciary.
The R.F.P. is the older (established in 1987) and more stringent of the two publicly monitored designations. All R.F.P.s must first demonstrate their competency, then abide by a code of ethics and adhere to rigorous practice standards as defined by the granting body, the Institute of Advanced Financial Planners (IAFP). Every R.F.P. must attest each year that financial planning is their primary vocation.[12]
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