A fiduciary is legally required to act in your interest. A broker is not. That distinction is worth understanding before you hand anyone your money.
The financial services industry has two distinct regulatory frameworks, and most clients don't know which one their advisor operates under. The difference is consequential.
Brokers - registered representatives at broker-dealer firms - are held to a "best interest" standard under Regulation Best Interest (Reg BI). This requires them to act in your best interest at the time of a recommendation, but it allows them to earn commissions and revenue sharing from the products they recommend, as long as those conflicts are disclosed.
In practice, this means a broker can recommend a product that pays them a higher commission than a comparable alternative - as long as they believe it is in your best interest and they disclose the conflict. Disclosed conflicts are still conflicts.
Registered investment advisers (RIAs) are held to a fiduciary standard. They are legally required to act in your best interest at all times - not just at the moment of a recommendation. They must avoid conflicts of interest, disclose any they cannot avoid, and never put their financial interests ahead of yours.
The fiduciary standard matters most in three situations: when you are being recommended a product, when there is a conflict of interest, and when advice affects your overall financial situation rather than a single transaction.
STQ is an RIA. We are fiduciaries at all times, for all of our interactions with clients. We earn no commissions and receive no compensation from third parties. If that standard matters to you - and it should - it is worth asking every advisor you work with whether they can say the same.
STQ is a registered investment adviser and fiduciary. If you want to understand what that means in practice, start with the Portfolio Diagnostic.
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