There are two standards: “fiduciary standard” and “suitability standard”. Some financial professionals are only held to the “suitability standard,” which means they make investment recommendations that are suitable for their clients but not necessarily the best option.
Under the “fiduciary standard” your financial advisor will be required to put your best interests ahead of their own profits. The Department of Labor says the idea of requiring the fiduciary standard is to get rid of conflicts of interest and save middle class families billions of dollars every year. Some argue there are already investor protections in place and the fiduciary rule will cause a dramatic increase in the cost and complexity of running a financial advising business and that could push some advisers to abandon small and middle income clients.
In the whiteboard video below, Elliot cleverly explains the difference between brokers and fiduciaries and sheds light on the issues surrounding the financial industry. Many banks and brokers are not held to a fiduciary standard. Fiduciary standard requires Drake & Associates to always put the client’s interest first. Simply put, we are held to a higher legal standard where we must act in the best interest of our clients and provide unbiased advice and services free from the conflicts of interest for the banks and brokers.