What is a Fiduciary Investment Advisor and Why Should I Work with One?
01/27/2025
01/27/2025
Recently, an article was published in the Wall Street Journal, titled “Your Advisor Is Under Pressure to Take Another Bite of Your Money.” It was written by columnist Jason Zweig who interviewed our firm’s CEO, Mark Armbruster. In the article, he details a situation where he was asked to “breach our fiduciary obligations to our clients.”
The article, which is behind the WSJ’s paywall, garnered over 300 comments and sparked some lively debates online. One question that caught our eyes was about the requirements of a fiduciary. Let us explain.
What is a Fiduciary?
As an SEC Registered Investment Advisor, Armbruster Capital assumes a fiduciary role. This means we are legally responsible for acting in our clients’ best interests and must put their interests ahead of our ours. A fiduciary’s two main duties are outlined in The Investment Adviser’s Act of 1940: the duty of care and the duty of loyalty. They are broad and apply to the entire advisor-client relationship.
Duty of Care
This means giving investment advice that is best for our clients and suits their individual situations. This includes providing advice that benefits the clients the most, ensuring the best execution of a clients’ transactions, and providing ongoing guidance and monitoring that is appropriate for their needs and the agreed upon relationship.
Duty of Loyalty
An advisor must place a clients’ interests ahead of its own. This includes avoiding conflicts of interest and disclosing potential conflicts to clients that could affect the advisory relationship. According to the rules, “for a disclosure to be full and fair, it should be sufficiently specific so that a client can understand the material fact of conflict of interest and make an informed decision whether to provide consent.”
The above duties are enforceable by law under the Advisors Act, recognizing the nature of the relationship between investment advisor and client. It’s important to know that not all investment advisors are fiduciaries and some only act as fiduciaries some of the time, so you should ask about this when selecting one. For more information about working with fiduciaries, or Registered Investment Advisors, check out our recent article Working with a Broker Dealer vs RIA. And contact us for more information about our services.
*This blog post cites language from the SEC’s Commission Interpretation Regarding Standard of Conduct for Investment Advisers.