Doctor's Life Magazine, Tampa Bay Doctor's Life Tampa Bay Vol. 1 Issue 6, 2013 | Page 10

The Fiduciary Standard of

Advisor Care

By Timothy McIntosh, CFP, MBA, MPH
Chief Investment Officer, SIPCO

you
giant battle is
in
industry.
stake,
Whetherknownare aware of it, aadvisors shouldbeing wagedtwothe financial services an advisor.AtThetheir
whether or not all financial
legally be required to put client’s interests ahead of
own (what is
as a fiduciary standard). Today, there are
separate models for
first is the Suitability model where advisors ethically agree to work in the best interests of the client’s and
recommend suitable investments based on the investor’s age, net worth, investment experience, etc. People
in this camp are commonly referred to as brokers and are generally classified as “commissioned agents”, or
advisors who can receive commission for selling investments or insurance products.
On the other side of the ledger, Fiduciaries are legally required to
act in a client’s best interest. Those investment advisors fall under the
Investment Advisors Act of 1940 and are regulated by the Securities
& Exchange Commission (SEC) or state securities regulators. The
fiduciary standard consists of a duty of loyalty and care, and simply
means that the advisor must act in the best interest of his or her client
at all times. For example, the
advisor cannot buy securities
for his or her account prior to
buying them for a client, and
is prohibited from making
trades that may result in higher
commissions for the advisor
or his or her investment firm.
Typically, Fiduciary advisors
are paid a flat fee for advice or
more typically, a percentage of
assets they manage (fee-only).
A universal fiduciary
standard would seek to
require all advisors to work
in this capacity. The one
standard fiduciary rule
Timothy McInto