We are fiduciaries.   We do not earn commissions on investment recommendations and have a fundamental obligation to act in the best interests of our clients.  We owe clients a duty of undivided loyalty and utmost good faith and will not engage in any activity in conflict with the interest of any client, not at least without disclosing it first.  Some conflicts are impossible to avoid and it’s our obligation to be clear when these conflicts exist.

The SEC has written about how an investment advisor must be a fiduciary and what else I must do as a result which you can read here.

A firm called Hightower created a simple whiteboard video that explains the difference between a broker and a fiduciary in a simple and effective way.  What’s humorous is Hightower is dually registered which means it has a broker-dealer affiliate.  That means if you’re a client (of Hightower or other dual registered firms) and you have a brokerage account and an advisory account, your advisor can earn commissions and earn an advisory fee.  That’s a problem since you don’t know whether you’re talking to a broker or a fiduciary when they’re making a recommendation. 

Regardless, enjoy the video.