What is the fiduciary standard?
The fiduciary standard outlines the obligations of a financial services professional to his/her clients.
There are two commonly referred to standards that advisors and financial planners are held to: the suitability standard and the fiduciary standard.
The suitability standard is the most common, and it requires that investments must fit a client’s investing objectives, time horizon and experience. This means that an advisor can sell their client the least suitable of all suitable options, which invites conflicts of interest such as selling higher commission products (thereby passing on higher fees to the clients) with no apparent benefit to the client.
Furthermore, an advisor working under the suitability standard doesn’t have to disclose his/her conflicts of interest or act in best faith to minimize those conflicts.
The fiduciary standard requires advisors to put their clients’ best interest ahead of their own. The principles that underlie the fiduciary standard, such as loyalty and care, provide the basis of trustworthy conduct by those entrusted. Fiduciary laws and regulations define prudent processes. Those prudent processes make adherence to fiduciary principles practical and reliable.
Is your advisor working under the fiduciary standard or the suitability standard?
It is very difficult for consumers to know which type of advisor is held to what type of standard.
Companies and advisors design their titles and descriptions of services to make the average person think they are in a trusted advisory relationship. It is very difficult for any company or advisor to be a fiduciary if they are selling commission-based or transaction-based products, proprietary products, or a limited lineup of products due to compensation guidelines. Furthermore, it is nearly impossible to be a fiduciary and give advice for “free” as long as the consumer buys insurances or investments through the firm.
The unspoken TRUTHs
Ask your advisor if they are acting under the fiduciary standard, if they can define the standard for you, and if they will put it in writing.
Ask your advisor if they are an Investment Advisor Representative or a Registered Investment Advisor and if you can have a copy of their form ADV. If they are not an IAR or RIA or do not give you this form (its actually a little personalized booklet about their firm and their background), then they are probably not acting under the fiduciary standard.
S.E.E.D. Planning Group, LLC ("S.E.E.D.") is a Registered Investment Advisor ("RIA"), registered with the U.S. Securities and Exchange Commission (“SEC”). S.E.E.D. provides financial planning and investment management services for clients in New York and other states across the country. S.E.E.D. will notice, file, and maintain all applicable licenses as required by the various states in which S.E.E.D. conducts business, as applicable. S.E.E.D. renders individualized responses to persons in a particular state only after complying with all regulatory requirements, or pursuant to an applicable state exemption or exclusion.
This web site is intended to provide general information about S.E.E.D. It is not intended to offer investment advice. Information regarding investment products and services are provided solely to read about our investment philosophy, our strategies, and to be able to contact us for further information.
Market data, articles, and other content on this web site are based on generally-available information and are believed to be reliable. S.E.E.D. does not guarantee the accuracy of the information contained in this web site. The information is of a general nature and should not be construed as investment advice.
S.E.E.D. will provide all prospective clients with a copy of our current Form ADV, Part 2A ("Disclosure Brochure") and the Brochure Supplement for each advisory person supporting a particular client. The Disclosure Brochure and Supplement are updated at least annually and are available on the SEC website at: You may also contact S.E.E.D. to request a copy.
If you have any questions regarding Compliance and Regulatory information contact us.