Why Is Legend A Fiduciary?
Legend Financial Advisors, Inc.® (Legend) is a fee-only1, fiduciary advisory firm:
In 1994, Legend became a fiduciary advisory firm and therefore governed by the FiduciaryxThe department of labor’s definition of a fiduciary demands that advisors act in the best interests of their client, and to put their clients’ interests above their own. It leaves no room for advisors to conceal any potential conflict of interest, and states that all fees and commissions must be clearly disclosed in dollar form to clients.
Source: investopedia standard of law. As such, Legend and its advisors work in their clients’ best interests at all times.
As a FiduciaryxThe department of labor’s definition of a fiduciary demands that advisors act in the best interests of their client, and to put their clients’ interests above their own. It leaves no room for advisors to conceal any potential conflict of interest, and states that all fees and commissions must be clearly disclosed in dollar form to clients.
Source: investopedia, Legend attempts to avoid conflicts of interests, where possible. This includes not receiving commissions of any sort.
What is a fiduciary?
the financial planning association defines the term FiduciaryxThe department of labor’s definition of a fiduciary demands that advisors act in the best interests of their client, and to put their clients’ interests above their own. It leaves no room for advisors to conceal any potential conflict of interest, and states that all fees and commissions must be clearly disclosed in dollar form to clients.
Source: investopedia as: someone who “acts in utmost good faith,” in a manner he or she believes to be in the “best interests” of the client.
When applied to financial advisors, a FiduciaryxThe department of labor’s definition of a fiduciary demands that advisors act in the best interests of their client, and to put their clients’ interests above their own. It leaves no room for advisors to conceal any potential conflict of interest, and states that all fees and commissions must be clearly disclosed in dollar form to clients.
Source: investopedia is an advisor who has a legal responsibility for managing investment decisions and making all decisions in the “best interests” of the client. A FiduciaryxThe department of labor’s definition of a fiduciary demands that advisors act in the best interests of their client, and to put their clients’ interests above their own. It leaves no room for advisors to conceal any potential conflict of interest, and states that all fees and commissions must be clearly disclosed in dollar form to clients.
Source: investopedia duty is the “highest standard of care”.
Who is not a fiduciary or does not act as a fiduciary would?
Examples of advisors who are non-fiduciaries include:
- Anyone who is not a registered investment advisor themselves or is not affiliated with a registered investment advisor.
- Individual salespeople who are employed by brokerage firms and/or broker/dealers (these firms are not fiduciaries either) and are often called stockbrokers, registered representatives, account executives or other similar position names whose advice is influenced by the compensation that they receive from their recommended transactions.
- Insurance companies or their salespeople who recommend high commission products such as annuities and life insurance.
- Financial product companies or their salespeople that recommend their own proprietary products.
- Individuals or companies that do not put client’s “best interests” first.
- Individuals or companies that do not act with prudence; that is, with the skill, care, diligence, good judgment and utmost good faith.
- Individuals or companies that mislead clients and do not provide truthful, transparent, full and fair disclosure of all important and material facts.
- Individuals or companies that do not avoid conflicts of interest.
- Individuals or companies that do not disclose and fairly manage, in a client’s favor, any unavoidable conflicts.
- Individuals or companies that will not attempt to minimize investment expenses where possible.
Are fee-based advisors fee-only advisors?:
Many individuals and firms who charge fees and receive commissions call themselves Fee-BasedxUnlike fee-only, financial advisors who are paid by the client directly (not through commissions), fee-based advisors often earn commissions on products sold as well as charge fees. Obviously, this is a conflict of interest and not in the best interest of the client.
In short, fee-based advisors are paid by their clients but also receive payments from other sources, such as commissions from financial product sales.
Brokers and dealers (or registered representatives) are required to sell products for commissions that are "suitable" to their clients.
Selecting a financial advisor? ask if they are a registered investment advisor and if they and their firm are fee-only advisors 100.0% of the time – meaning they never receive commissions! if they don’t receive any commissions, then both the advisor and the firm are fiduciaries.
If the advisor is a broker or a dealer, they are a registered representative, which means they are generally held to a lower legal standard, which requires them to sell products that are “suitable” to their clients.
If an individual is a registered representative of a broker/dealer or is a fee-based advisor, search for their firm’s form adv filing at the U.S. securities and exchange commission website: www.sec.gov. The ADV document includes information that spells out how brokers at the company are compensated. Check form adv before retaining any financial advisor. Form adv explains an advisor and advisory firm’s fee structure, but also lists any past misconduct. advisors instead of fee and commission advisors. In short, they are attempting to mislead the public that they are Fee-OnlyxThe national association of personal financial advisors (napfa) defines a fee-only financial advisor as one who is compensated solely by the client with neither the advisor nor any related party receiving compensation that is contingent on the purchase or sale of a financial product. Neither advisors or their firms may receive commissions, rebates, finder’s fees, bonuses or other forms of compensation from others as a result of a client’s implementation of the individual’s planning recommendations. "Fee-Offset" arrangements, 12b-1 fees, insurance rebates or renewals and wrap fee arrangements that are transaction based are examples of compensation arrangements that do not meet the napfa definition of fee-only practice.
Source: napfa.org1 advisors.
Legend will commit in writing that all decisions will be made in the client’s best interest.
Legend Financial Advisors, Inc.® will sign a document that Legend entitled “putting client interests first” for any prospective client. In this FiduciaryxThe department of labor’s definition of a fiduciary demands that advisors act in the best interests of their client, and to put their clients’ interests above their own. it leaves no room for advisors to conceal any potential conflict of interest, and states that all fees and commissions must be clearly disclosed in dollar form to clients.
Source: investopedia oath document Legend commits to the seven FiduciaryxThe department of labor’s definition of a fiduciary demands that advisors act in the best interests of their client, and to put their clients’ interests above their own. It leaves no room for advisors to conceal any potential conflict of interest, and states that all fees and commissions must be clearly disclosed in dollar form to clients.
Source: investopedia principles.
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To obtain a pdf copy of a the FiduciaryxThe department of labor’s definition of a fiduciary demands that advisors act in the best interests of their client, and to put their clients’ interests above their own. It leaves no room for advisors to conceal any potential conflict of interest, and states that all fees and commissions must be clearly disclosed in dollar form to clients.
Source: investopedia oath form signed by Legend, please click here. -
To obtain a pdf copy of an unsigned FiduciaryxThe department of labor’s definition of a fiduciary demands that advisors act in the best interests of their client, and to put their clients’ interests above their own. It leaves no room for advisors to conceal any potential conflict of interest, and states that all fees and commissions must be clearly disclosed in dollar form to clients.
Source: investopedia oath form, please click here.
Have a current advisor or broker?
Ask that advisor or broker or other salesperson to read and sign the document entitled “FiduciaryxThe department of labor’s definition of a fiduciary demands that advisors act in the best interests of their client, and to put their clients’ interests above their own. It leaves no room for advisors to conceal any potential conflict of interest, and states that all fees and commissions must be clearly disclosed in dollar form to clients.
Source: investopedia oath: putting client interests first”. If they won’t or are not allowed by their firm, to sign the form, consider searching for a Fee-OnlyxThe national association of personal financial advisors (napfa) defines a fee-only financial advisor as one who is compensated solely by the client with neither the advisor nor any related party receiving compensation that is contingent on the purchase or sale of a financial product. Neither advisors or their firms may receive commissions, rebates, finder’s fees, bonuses or other forms of compensation from others as a result of a client’s implementation of the individual’s planning recommendations. "fee-offset" arrangements, 12b-1 fees, insurance rebates or renewals and wrap fee arrangements that are transaction based are examples of compensation arrangements that do not meet the napfa definition of fee-only practice.
Source: napfa.org1, FiduciaryxThe department of labor’s definition of a fiduciary demands that advisors act in the best interests of their client, and to put their clients’ interests above their own. It leaves no room for advisors to conceal any potential conflict of interest, and states that all fees and commissions must be clearly disclosed in dollar form to clients.
Source: investopedia advisor and/or a Fee-OnlyxThe national association of personal financial advisors (napfa) defines a fee-only financial advisor as one who is compensated solely by the client with neither the advisor nor any related party receiving compensation that is contingent on the purchase or sale of a financial product. Neither advisors or their firms may receive commissions, rebates, finder’s fees, bonuses or other forms of compensation from others as a result of a client’s implementation of the individual’s planning recommendations. "Fee-Offset" arrangements, 12b-1 fees, insurance rebates or renewals and wrap fee arrangements that are transaction based are examples of compensation arrangements that do not meet the napfa definition of fee-only practice.
Source: napfa.org1, FiduciaryxThe department of labor’s definition of a fiduciary demands that advisors act in the best interests of their client, and to put their clients’ interests above their own. It leaves no room for advisors to conceal any potential conflict of interest, and states that all fees and commissions must be clearly disclosed in dollar form to clients.
Source: investopedia advisory firm.