ABC Wealth Advisors are bound to a fiduciary standard that is regulated by the Securities and Exchange Commission (SEC) or state securities regulators, both of which hold advisers to a fiduciary standard that requires them to put their client’s interests above their own.

The act is pretty specific in defining what a fiduciary means, and it stipulates that advisers must place their interests below that of their clients. It consists of a duty of loyalty and care. For example, advisers cannot buy securities for their accounts prior to buying them for clients and are prohibited from making trades that may result in higher commissions for themselves or their investment firms.

It also means advisers must do their best to make sure investment advice is made using accurate and complete information and that the analysis is as thorough as possible. Avoiding a conflict of interest is important when acting as a fiduciary, which means that advisers must disclose any potential conflicts. Additionally, advisers need to place trades under a “best execution” standard, meaning they must strive to trade securities with the best combination of low cost and efficient execution.

The SEC has stringent rules for investment advisers. Advisors are allowed to assist in the financial decisions of individuals and institutions who make financial decisions in order to plan for retirement, college payments, or in building their own, often taxable, investment portfolios. The SEC also determines how advisers are able to charge their clients.


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