A fiduciary financial advisor works with a variety of clients, acting in the best interest of his or her clients. This means that an advisor must not only sell investment products to clients, but also advise them on the proper conduct and trading strategies for those products. Fiduciary advisors must: place the client’s best interests first, seeking the very best deals and terms on investment products. Act in good faith without offering unsolicited advice, and disclosed any existing conflicts of interest.
If a fiduciary financial advisor fails to adhere to this standard of conduct, he or she may be subject to disciplinary action, including possible withdrawal from their current positions. A commission is levied by the underwriters’ board – which is appointed by the S&P (investment mortgage brokers association) – upon compensation or commission of any transaction they perform.
In order to ensure that investors receive the highest levels of professional service, many brokerages employ a system of peer review to assure that a fiduciary financial advisor provides the highest level of quality service. The results of this process are: a recommendation for the individual to the next level of management and a referral to a primary broker if further advancement is required. This peer review process is intended to provide a guarantee of high-quality service by professionally trained fiduciary financial advisor.
It is extremely important that any financial planner using a fiduciary, financial advisor role, or that the client he or she serves utilizes the services of such an advisor. As a general rule, any advisor who recommends a stock purchase or sale should: disclose any potential conflicts of interests, and offer independent counsel to the investor.
This will protect against the appearance of conflict of interest by ensuring that any advice given is in the best interest of the investor and provides the maximum protection from liability. Furthermore, providing education about conflicts of interests among other professionals can help minimize conflicts of interest amongst advisors, as well as providing additional protection to clients who may be at risk of actual or perceived conflicts of interest.