Fiduciary Relationship

Why is it so important to collaborate with a financial advisor who is also a fiduciary? Fiduciaries are held to a higher standard of client care than non-fiduciaries, and must act in their client’s best interest. For example, a fiduciary must avoid conflicts of interest in compensation, such as receiving variable commissions based on individual securities sold. Fiduciaries typically charge an annual level fee based on the percentage of the account value being managed, which directly ties a fiduciary’s success to the performance of clients’ accounts. Brokers and non-fiduciary advisors can be compensated differently based on which product they choose to sell clients, which creates a conflict of interest with their recommendations.