Which Standard? Suitability or Fiduciary? Sign the Petition
There is a red-hot debate taking place over the difference between a broker’s suitability standard versus investment advisor’s fiduciary standard. It has been well publicized, as last year’s financial meltdown has caused many people to reconsider how they are getting their advice, as well as whether it’s truly in their best interest.
Here is a simple example:
You decide to get advice on investing in a mutual fund that reflects the S&P 500 companies.
Suitability – Suitability would allow an advisor to invest the individual’s assets in an index fund with expenses that are perceived to be suitable, such as the ING Index Plus LargeCap Fund – Class A, with a net expense of 0.95%.
Fiduciary – A fiduciary standard would require the investment advisor to find a fund with the best available expenses and cost to the investor, such as the Vanguard 500 Index Fund, with an expense of 0.18%. Similar funds with the same investment objective, but much different cost. You get the idea. To learn more, you can read an article written by Lauren Young in BusinessWeek.
Do your part, take 30 seconds to fill out a petition to support Congress moving all financial advisors to a clear fiduciary standard that is in the investor’s best interests, not the financial advisor, mutual fund or insurance company.