Fiduciary vs. Broker


PNW Asset Management Logo

Because the majority of the financial services industry is hazardous to your wealth, understanding the difference between a Fiduciary, such as an adviser working for a registered investment advisory firm, and a stockbroker or an insurance agent is more important now than it ever has been. A Fiduciary has a defined legal obligation to act in the client’s best interest. This is worth repeating for emphasis: A Fiduciary has a defined legal obligation to act in the client’s best interest. Investment advisers like us have a legal obligation to put your interests first. We act in your best interest and must set aside personal motives and avoid conflicts of interest, and fully disclose them when they exist, in favor of pursuing the best solution to your unique situation. In fact, registered investment advisers like Pacific Northwest Asset Management, LLC are governed by the Fiduciary Standard; stockbrokers and registered representatives are not.Watch out for Wall Street...They are held to a lesser measure, the Suitability Standard. Simply stated, the Suitability Standard merely calls for brokers to sell investments they believe are suitable for their clients, not necessarily what’s best for the client.

Investors mistakenly believe that brokers are required to put their clients’ interests first. They are not. Brokers and insurance agents are ultimately salespeople who are generally compensated by commission, or a production based bonus, and whose primary loyalty is to their employers.

To avoid any confusion and to make certain your best interests are always first and foremost, simply ask your financial professional under what standard they operate. Make certain they ALWAYS operate under the Fiduciary Standard and do not change hats depending upon the circumstances. Being a full-time Fiduciary is a binary condition. An investment professional either is, or is NOT, a full-time Fiduciary. Any financial professional who does not ALWAYS operate under a Fiduciary standard means your best interest might not be your financial professional’s number one priority, period.