Fiduciary. For many RIA?s (registered investment adviser) this term is a primary reason for choosing to identify, define, and distinguish their practice from non-fiduciaries. It also can be used by consumers as part of their criteria in choosing an adviser to develop a relationship with. A fiduciary from the perspective of the RIA and the client can be outlined as follows: A Fiduciary duty generally is considered to be the highest legal duty that one can have to another, and according to the Investment Adviser Association?s definition found in its standards of practice, ?As a fiduciary and investment adviser has an affirmative duty of care, loyalty, honesty, and good faith to act in the best interest of its clients. The parameters of an investment adviser?s fiduciary duty depend on the scope of the advisory relationship and generally include; the duty to at all times place the interests of clients first, the duty to have a reasonable basis for its investment advice, the duty to seek best execution for client securities transactions, the duty to make investment decisions consistent with any mutually agreed upon client objectives, strategies, policies, guidelines and restriction, the duty to treat clients fairly, the duty to make full and fair disclosure to clients of all material facts about the advisory relationship-particularly conflicts of interest, the duty to respect the confidentiality of client information.

Given the above perspective, holding oneself out as a fiduciary should make acquiring the critical level of trust to engage an adviser/client relationship more efficient. However, much of the public that I have conversed with regarding the differences between an adviser with a fiduciary responsibility and a non-fiduciary, are unaware of, or are confused as to the benefits of this attribute. The media?s and investment industry?s substitution of the phrases ?financial consultant?, ?investment adviser?, and ?financial adviser? contributes to this puzzlement in the minds of consumers. Further clouding the issue are transaction based brokers that have set themselves up in a dual capacity as an adviser with fiduciary responsibilities as well as a broker with a suitability requirement. This bifurcated role begs the question of when to turn on the fiduciary switch and when to turn on the suitability switch.

Obviously clarification and guidance are needed either from existing regulatory agencies or possibly new a SRO (self regulatory organization). Given the past years market volatility and the high profile headlines of Bernard Madoff et al., it is certain changes are on the horizon for all participants in the advisory business.