What’s your fiduciary responsibility?

September 26, 2013 by

The concept of fiduciary duty has received a lot of attention from financial publications, like Investment News, lately, due to the effort of the U.S. Department of Labor to set stricter standards on professionals providing advice on retirement plans.1

So it brings up a good question. What is the difference between fiduciary and suitability, and how do they affect you?

A fiduciary is a person or company that has the power and obligation to act for another under circumstances which require total trust, good faith, and honesty.2 FINRA suitability Rule 2111(a) states in part that a member or an associated person must have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on the information obtained through the reasonable diligence of the member or associated person to ascertain the customer’s investment profile.3

It’s a lot to understand, which is why you can download this informational graphic to see detailed differences between the two.

So why does this all matter?

Recently, it has been questioned whether there should be a separate fiduciary standard—implemented by the Labor Department—for financial professionals selling individual retirement accounts, as outlined in the Investment News article. And so what has commonly been a standard for those selling securities-related products is now under consideration for other financial and insurance professionals.

In addition, the Securities and Exchange Commission is considering increasing the standards it imposes on broker dealers,4 which then might work its way to other areas of the financial services and insurance industries. This all comes under the guise of the 2010 Dodd- Frank Act Wall Street Reform and Consumer Protection Act, regulations developed after the economic collapse that began in 2008.

Unfortunately, there’s no crystal ball to say what, for sure, will be the fate for professionals working in insurance, retirement planning or financial planning. In an ideal world, the rules for financial professionals would be streamlined by the various regulatory bodies, and the expectations laid out in Dodd-Frank would be clearer.

In the meantime, go ahead and take a look at the infographic provided in this blog. And don’t be surprised if you see another blog post as the regulations change. If you have any questions, don’t hesitate to give me a call at 877.886.1939 or send me an email (mbott@brokersifs.com).


1 Investment News “Fiduciary duty boosts revenue, not compliance costs: FPC” July 8, 2013.

2 http://www.nolo.com/dictionary/fiduciary-term.html

3 http://finra.complinet.com/en/display/display_main.html?rbid=2403&record_id=14960.

4 Investment News “White says SEC is moving on fiduciary but other rules to come first” July 30, 2013.




Kyle Pieper

Kyle Pieper is the Manager of Business Development for Brokers Financial. He joined the firm in March of 2013. Kyle is responsible for recruiting new advisors and representatives to the firm. He also assists with marketing and partner relationships. He has six years of insurance and investment-related experience as both an advisor and internal sales. When not at work he can be found on a golf course, hunting or in the gym. Securities and investment advisory services offered through Brokers International Financial Services, LLC, Member SIPC, Panora, IA. Brokers International Financial Services, LLC and Brokers International, Ltd are affiliated companies.

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