Fiduciary Rule

Investment advisers are bound to a fiduciary standard that was established as part of the Investment Advisers Act of 1940. As part of this act and the subsequent Dodd-Frank Wall Street Reform Act of 2010, investment advisers can be regulated by either the Securities and Exchange Commission (SEC) or state securities' regulators. Both of these bodies hold advisers to a fiduciary standard that requires the adviser to put their clients’ interest above their own at all times and adhering to the duties to loyalty and care. The adviser must do his best to make sure the investment advice is made using accurate and complete information and is as thorough as possible. The adviser must also avoid conflicts of interest and most disclose any potential conflicts. Additionally, the adviser needs to place trades under a “best execution” standard, in other words, trade securities with the best combination of low cost and efficient exposure.