BROKER vs FIDUCIARY
Managing the Expectations of Consumers
Registered Representatives are advisors of Broker Dealers such as Merrill Lynch, Raymond James, Edward Jones, and Morgan Stanley. They employ advisors who have an obligation to deal fairly, honestly, and openly with their customers. If they do not, they can be liable for a variety of offenses. Financial Industry Regulatory Authority (FINRA) requires that Registered Representatives recommend suitable investments for their customers, though these recommendations may not be the best recommendations. The requirement to provide only suitable investments might make it appear that Registered Representatives have a fiduciary responsibility to their customers, when, in fact, they do not.
Investment Advisor Representatives of a Registered Investment Advisory, such as Scottsdale Wealth Advisory, have a fiduciary relationship with their customers, which implies a higher standard of care than what is required of Registered Representatives. The implication for Investment Advisor Representatives is that if their advice does not meet a fiduciary standard of care, they are vulnerable to litigation. When an Investment Advisor Representative gives investment advice or makes investment decisions on behalf of a customer, the advisor is held to a higher standard that is based not only on caution, but also on expertise and their commitment to a prudent investment process.