Not all "financial advisors" are held to the same legal and ethical standards...
Unfortunately, not all financial advisors are held to the same legal and
ethical standards. As a Registered Investment Advisor (RIA), each member of the E&G Wealth Advisory Group has the legal
obligation to act as your fiduciary agent and to always do what is in
your best interest. We adhere to the highest ethical standards as
established by the National Association of Personal
Financial Advisors (NAPFA) and CFP Board.
The following is an excerpt from the NAPFA publication, Pursuit of a Financial Advisor Field Guide:
Federal and state law requires that Registered Investment Advisors (RIA) be held to a Fiduciary Standard. This requires an advisor to act solely in the best interest of the client at all times. RIAs must disclose any conﬂict, or potential conﬂict, to the client prior to and throughout a business engagement and must adopt a Code of Ethics and fully disclose how they are compensated.
Unfortunately, only a small proportion of "ﬁnancial advisors" are federally or state-registered RIAs. Most so-called ﬁnancial advisors are considered "Broker-Dealers" by the Securities and Exchange Commission (SEC). Brokers are not held to a Fiduciary Standard; they are held to the lower Suitability Standard. In fact, they are required by federal law to act in the best interest of their employer, not in the best interest of their clients.
Because broker-dealers are not necessarily acting in your best interest, the SEC requires them to add the following disclosure to your client agreement. Read this disclosure, and decide if this is the type of relationship you want to dictate your ﬁnancial security:
"Your account is a brokerage account and not an advisory account. Our interests may not always be the same as yours. Please ask us questions to make sure you understand your rights and our obligations to you, including the extent of our obligations to disclose conﬂicts of interest and to act in your best interest. We are paid both by you and, sometimes, by people who compensate us based on what you buy. Therefore, our proﬁts, and our salespersons' compensation, may vary by product and over time."
If this disclaimer appears in agreements you are signing, you are not working with a Fiduciary advisor.
Click here to read more from the NAPFA publication, Pursuit of a Financial Advisor: Field Guide.