Is Your Investment Advisor a Fiduciary?

Is Your Investment Advisor a Fiduciary?

January 27, 2020

Choosing an investment advisor (portfolio manager) isn’t easy. There are different designations, compensation methods, business methods and personalities to consider.

One way to narrow down the list is to consider only investment managers who are “fiduciaries.”

What is a fiduciary?

Investopedia says: a “fiduciary manages the assets [investments] for the benefit of the other person, rather than for his or her own profit.”

The Securities and Exchange Commission website mentions the following: Fiduciaries have a fundamental obligation to provide investment advice in the best interests of clients, owe clients a duty of undivided loyalty and utmost good faith, must employ reasonable care to avoid misleading clients, must provide full and fair disclosure of all material facts to clients and prospective clients and must eliminate or disclose all conflicts of interests. The SEC adds that “departure from this fiduciary standard may constitute “fraud” upon your clients.”

Surprisingly, many stockbrokers and others who manage investments are not fiduciaries. They do not have to meet the same high standard of care. The lower standard is called the “suitability standard.” Stock brokers do not have to put the clients’ interests first.

According to, “Some brokerage firms don't want or allow their brokers to be fiduciaries. This uncertainty makes it important to ask the advisor whether they are a fiduciary.”

A lower standard of care might be enough if you are only looking for help buying and selling securities based upon your own decision-making. But if you need someone to manage your investments, recommend investment strategies and make sure your portfolio matches your needs, a fiduciary makes more sense.

Arthur Stein Financial, LLC is a Registered Investment Advisor, which means that the firm is a fiduciary when dealing with investment clients. Our obligation is to put the client’s interest first. For instance, we cannot choose one investment over another because it would be more profitable for the firm.

Doctors, lawyers and CPAs are fiduciaries. Don’t you want your investment manager to meet that same high standard?

The information in this blog has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority. This presentation is for educational purposes only. To learn more about the topics mentioned and if they are suitable for you, consult an appropriate professional before implementing. Tax laws can change at any time.

Any information provided in this presentation has been prepared from sources believed to be reliable, but is not guaranteed and is not a complete summary or statement of all available data necessary for making an investment decision. Any information provided is for information purposes only and does not constitute a recommendation.
Arthur Stein Financial, LLC is registered with the states of MD, DC and VA. it is not registered with, nor is it required to be registered with, the Securities and Exchange Commission.

Keep in mind that:

  • Past performance is no guarantee of future performance;
  • Investments involve the risk of loss of principal and earnings;
  • ETFs, mutual funds, including money market funds, etc. are not guaranteed in any way by the US Government, the FDIC, a bank or anyone else.
    “Average annual return” evens out variations in the actual year-to-year returns.
  • ETFs, mutual funds and individual stocks and bonds fluctuate in value and there will always be times when they lose value.
  • None of the information provided by Arthur Stein is necessarily relevant to anyone’s particular situation. Situations differ among individuals and you should not assume that these generalizations or information apply to you.

Arthur Stein also sells life, disability and long-term care insurance. the firm does not have a fiduciary relationship with clients for the sale of these insurance products. Clients should be aware that these services pay a commission and involve a conflict of interest, as commissionable products conflict with the fiduciary duties of a registered investment adviser.

Investments mentioned may not be suitable for all investors.