Did Your Adviser Put Your Best Interests First?
By law, investment advisors who give clients advice and recommendations on investments have a fiduciary duty to act in their clients' best interest. All conflicts of interest must be disclosed before contracts are signed.
What is Fiduciary Duty?
“Fiduciary Duty” is a term used that requires investments advisors in certain cases to act in the best interest of their clients, putting their client’s interests and needs above their own. Under laws that govern fiduciary duties, investment advisors in certain circumstances must comply with ethical conduct and practices that protect a client's investments. These duties include advice that's in the best interest of each client, avoid making misleading or false statements, and charge reasonable fees and commissions for services. In June 2017, a new fiduciary rule was passed by the U.S. Department of Labor that will put financial and investment advisors under scrutiny for their actions in regards to advice provided in retirement accounts. Parts of the rule are now under review by the Trump administration.
Protecting the Client's Interest
Over the last decade, many investors suffered significant financial losses due to investment fraud and the banking collapse. In 2012, a Consumer Federation of America survey showed that 55 percent of investors stated they did not trust advice received from financial advisors and consultants enough to invest their money. This situation of distrust was perpetuated by the fact that many registered brokers representing themselves as financial advisors or consultants misled investors who lost their investments. A study by the Securities Exchange Commission revealed that 59 percent of investors thought that their broker was required to act in their best interest according to law. Unfortunately, that is not always the case.
When financial advisors and consultants act in their clients' best interest, they can help to increase investment earnings and prevent financial losses often seen by investment loss attorneys. Following certain duties protects client investments:
- Making investment recommendations based on the client's best interest
- Advising clients on all aspects of investments, including conflicts of interest
- Preventing hasty investment actions in turbulent markets
- Receiving a flat fee rather than a commission for investment advice
- Completing a comprehensive client risk tolerance analysis for safe investments
Investment advisors have a fiduciary duty to their clients in many cases. For help with investment claims, contact Meyer Wilson at 888-390-6491 for a free consultation.