The Fiduciary Standard is an important aspect of our overall business. It is imperative to explain the role of a fiduciary to our clients, and to help them understand the importance of the Fiduciary Standard.
The Fiduciary Standard
Investment advisors are bound to a fiduciary standard that was established as part of the Investment Advisors Act of 1940. Advisors can be regulated by the SEC or state securities regulators, both of which hold advisors to a fiduciary standard that requires them to put their clients’ interests above their own. This standard consists of the following:
- A duty of loyalty and care, simply meaning that the advisor must act in the best interest of their client.
- The advisor is prohibited from making trades that may result in higher commissions for the advisor or his or her investment firm.
- The advisor must do his or her best to make sure investment advice is made using accurate and complete information, or basically, that the analysis is thorough and as accurate as possible.
- The advisor must do their best to avoid conflicts of interest and must disclose any potential conflicts to placing the client’s interests ahead of their own.
- The advisor needs to place trades under a “best execution” standard, meaning he or she must strive to trade securities with the best combination of low cost and efficient execution.
Investment advisory services offered through Virtue Capital Management, LLC (VCM), a registered investment advisor. VCM and LaMarche and Associates, LLC are independent of each other. For a complete description of investment risks, fees and services, review the VCM Firm Brochure (ADV Part 2A) which is available from your Investment Advisor Representative or by contacting VCM.
Fiduciary duty extends solely to investment advisory advice and does not extend to other activities such as insurance product sales, including annuities, life insurance, and long term care insurance or broker dealer services. Advisory clients are charged a monthly fee for assets under management while insurance products pay a commission, which may result in a conflict of interest regarding compensation. IAR is also a licensed insurance agent. In this capacity, IAR may offer fixed life insurance products and receive normal and customary commissions. The client is under no obligation to purchase products through IAR on a commissionable basis. In addition, IAR may receive other compensation such as fixed or variable life trails. The potential for receipt of commissions and other compensation when IAR acts as an insurance agent may give IAR an incentive to recommend insurance products based on the compensation received.