FIDUCIARY RESPONSIBILITYAll of the financial professionals at Commons Capital Advisors accept ﬁduciary responsibility and therefore have a legal responsibility to put your needs ahead of their own. There are a number of important differences that separate advisors who have ﬁduciary responsibilities from those who do not.
Industry estimates show that approximately 85% of ﬁnancial advisors do not have ﬁduciary responsibility. This includes stockbrokers, insurance agents or simple sales representatives. They may hold various licenses, but since they are not ﬁduciaries, they are often more interested in selling investment products than managing your portfolio.
Non-ﬁduciary advisors are compensated through commissions, which are often equivalent to management fees over several years. In the end, stepping away from one of these products usually involves a hefty surrender fee - no matter how bad the service or the results. Titles for non-ﬁduciary advisors are unregulated, which means they can adopt any title they like: ﬁnancial advisor, vice president, ﬁnancial consultant and ﬁnancial planner. It doesn't change the fact that they typically do not have a ﬁduciary responsibility to put an investor’s interests ahead of their own. These sales reps have limited disclosure requirements and are not allowed to have account discretion. Most of them receive a large commission up front on the initial sale, which means they have very little incentive to continue tracking the investment and assisting the client.
Fiduciary advisors are usually Registered Investment Advisors (RIA's) or Investment Advisor Representatives (IAR’s), like all advisors at CCA. These advisors are registered with the SEC or the state security division, and they are acknowledged ﬁduciaries that provide ongoing ﬁnancial advice and services. Fiduciary advisors receive compensation on a quarter-by-quarter or month-by-month basis for continued services, and that compensation ends if the investor is dissatisﬁed and chooses to leave the ﬁrm. An advisor with ﬁduciary responsibilities is held to a higher ethical standard and have the knowledge to provide sophisticated wealth management services and advice. IAR’s are licensed to provide ongoing ﬁnancial advice, and ﬁduciary advisors are required to provide disclosure in their ADV’s. Download our Form ADV under the Asset Management section.