At TFA we are Fiduciaries. We actually could’ve ended this post with that sentence, but just in case you haven’t read it on our home page here or the about us section here I’ll explain it further and why it is important to us and our clients. The Securities and Exchange Commission (SEC) recently voted to adopt a set of regulations specifically designed to provide a higher level of transparency and accountability to retail investors. The press release can be read in full from the SEC here, which was made public on June 5, 2019. Overall, we feel like this is a step in the right direction for our industry, more specifically:
Under Regulation Best Interest, broker-dealers will be required to act in the best interest of a retail customer when making a recommendation of any securities transaction or investment strategy involving securities to a retail customer. Regulation Best Interest will enhance the broker-dealer standard of conduct beyond existing suitability obligations and make it clear that a broker-dealer may not put its financial interests ahead of the interests of a retail customer when making recommendations.
These regulations impose a new standard of conduct that some firms were not legally required to abide by. The reason why this is a win for clients is because before now there was really no way to know if an advisor was acting in your best interest. There have always been “best practices” and things to look for when evaluating any advisory relationship. Some of those were:
- Are the advisors CERTIFIED FINANCIAL PLANNERS™? – which would require them to adhere to strict ethical standards and guidelines set by the CFP® board.
- How are they compensated? Do they earn a commission? Are they paid a Fee? Or combination of both?
- Lastly, are they legally required to act as a full-time fiduciary? This is where these enhanced standards have provided more clarification.
At TFA, we’re proud to say that we’ve been ahead of the curve on this. All of our advisors are CERTIFIED FINANCIAL PLANNERS™. We are a FEE-ONLY firm, which means our only compensation is derived from clients and not from the sale of any products. We do not have revenue sharing agreements with investment companies and products that would present a conflict of interest as to what we recommend and implement for investors. We are also full-time fiduciaries and act on that capacity with all our client accounts. Our clients can rest assured that we will continue to put their interest first. If you are not currently a client of ours and would like to discuss your relationship further, we’d love to hear from you.