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Fiduciary vs. Suitability

Deciphering the “What’s What” and “Who’s Who” of today’s complex financial services industry can be difficult, even for the most financially sophisticated members of the general investing public. Two words: fiduciary and suitability are critical in understanding the motivation behind the person offering you financial products or advice.

Recognizing the difference between the fiduciary and suitability standards may also help you to appreciate the level of care you receive from a trusted financial advisor. Though the distinction between the fiduciary and suitability methods of offering advice is rarely discussed by “broker-led” large financial companies, we feel it is essential for investors to know the difference.

Peterson Financial Group believes the Fiduciary model of disclosure and transparency is now in the “best interests of the client.”

Broker
(the suitability standard)

Offers products for sale from a range of products carried by the company he or she represents

Is paid commissions calculated as a percentage of the amount of money invested into the product

Advisor
(the fiduciary standard)

Offers “best advice” taking into account the needs of each individual client

Is paid a quarterly fee calculated as a percentage of the assets under advisement

“What’s What” relates to the standard of care upon which financial advice is provided to the investing public:

The fiduciary standard requires advice to be provided in the best interests of the client including the disclosure of possible conflicts of interest.

Today’s financial industry offers its clients a wide range of options. In our eyes, every client deserves to have their needs put first and solutions offered according to those needs.

Peterson Financial Group can help you to understand these options and work with you to decide how they might impact your specific financial needs.

Please read this article that also explains key differences between the fiduciary and suitability standards: What Wall Street Does Not Want You To Know About Financial Advisors