• Skip to primary navigation
  • Skip to main content

The Institute for the Fiduciary Standard

A resource site for investors, brokers, academics and the media.


Building a fiduciary culture of honesty, integrity, and expertise.

  • About
    • Fiduciary Law
    • Board of Directors
    • Board of Advisors*
    • Chairman’s Council
    • Real Fiduciary™ Practices Board
  • Real Fiduciary™
    • Real Fiduciary™ for Investors
      • Real Fiduciary™ Advisor Registry
      • Why You Need a Real Fiduciary™ Advisor
    • Real Fiduciary™ for Advisors
      • Real Fiduciary™ Affirmation Program
      • Real Fiduciary™ Background
  • Fiduciary September
    • 2022
    • 2021
    • 2020
    • 2019
    • 2018
    • 2017
    • 2016
    • 2015
    • 2014
    • 2013
    • 2012
  • Frankel Prize
    • 2022
    • 2021
    • 2020
    • 2019
    • 2018
    • 2017
    • 2016
    • 2015
    • 2014
    • 2013
  • Programs
    • Leadership Through Fiduciary Program
    • “Raise Your Voice” Campaign
    • SEC Conduct Standards Rulemaking
    • Institute Initiatives & News
    • Personal Financial Planning Program Webinars
    • Prior Programs
      • Advisor On My Side
      • No Incidental Investor Initiative
      • Bogle Legacy Forum
        • Bogle Forum
        • Bogle Book
      • August 11th 2015
  • Research
    • Academic Papers
    • Legislation and Rulemaking
    • White Papers
    • Op-Ed Commentary
  • Jack Bogle

What Is a Fiduciary Financial Advisor?

By The Institute on April 15, 2021

This article originally appeared on Yahoo.com by Coryanne Hicks.

In April 2016, a new word entered many investors’ vocabularies: fiduciary. Even for those who’d heard it before, the term took on a whole new meaning when the Department of Labor’s Fiduciary Rule was released. The rule was officially vacated by the Fifth Circuit Court of Appeals in June 2018, but resurfaced in a less restrictive form in 2020. The latest version was approved by President Joe Biden’s administration and went into effect on Feb. 16, 2021.

With the rule, financial advisors fall into two camps: fiduciaries and nonfiduciaries, adding a new level of confusion — and risk — to the advisor-client relationship for many investors. Not only are there fiduciaries and nonfiduciaries, but also true fiduciaries and pretend fiduciaries, which present even bigger risks to investors.

“Pretend fiduciaries talk like fiduciaries to sound trusting, then they act like salesmen,” says Knut Rostad, founder and president of the Institute for the Fiduciary Standard, a nonprofit that advocates for the fiduciary standard in McLean, Virginia. They can say things that mislead and confuse investors who don’t understand the full scope of the rule and their rights.

This is the crux of the issue, he says. To call both sales brokers and fiduciary advisors “advisors” only creates confusion. “We don’t confuse dietitians with butchers or medical doctors with drug companies,” he says. But the financial industry appears happy to perpetuate such confusion.

A 2019 Financial Trust Report by digital wealth manager Personal Capital found that nearly half of Americans falsely believe all advisors are legally required to always act in their clients’ best interests. Not only is this inaccurate, but it can also be detrimental to investors who unwittingly expose themselves to biased and potentially costly advice from advisors who put their own interests before investors’ interests.

Read the full story on Yahoo.com.

Dan Moisand

 

Dan Moisand is a nationally recognized fiduciary fee-only financial planner, an Institute Real Fiduciary™ Advisor and Chair-elect of the CFP Board.

The Institute has enshrined the ‘Moisand Rule’ on fiduciary practices. It is basic and is more important today than ever: “You have to avoid conflicts. If I avoid a conflict, I don’t worry about it.”

Watch the video of Moisand speaking here.

Bob Veres

 

Bob Veres is a long term observer of financial planning. His Newsletter, “Inside information” Is a staple of leading planners. In the May edition he writes about fiduciary and the Institute.

"But a much bigger point is that the fiduciary standard—as Knut Rostad of the Institute for the Fiduciary Standard has pointed out—has been determined by the Supreme Court (1963 ruling) to be at the very heart of the Investment Advisers Act of 1940. It is the foundation of what it means to be an RIA registered with the SEC instead of a tipster or a tout."

- Bob Veres, Parting Thoughts ... The SEC's Own Compliance Culture

  • Contact

 

  • LinkedIn
  • Twitter

Copyright © 2023 · Web Design by Milkweed Web