Suitability Standard vs. Fiduciary Standard

August 30th, 2016|By Jeffrey Ricchiuti

This is a topic at the forefront of recent financial headlines that we wanted to address as there is an important difference here between the two, especially as it relates to retirement plans.

In order to understand the difference between the two, it is important to have a clear understanding of what the responsibilities are of a retirement plan fiduciary.

These responsibilities are:

  • Acting solely in the best interest of Plan participants and their beneficiaries
  • Carrying out our duties prudently
  • Following the Plan documents
  • Diversifying Plan investments
  • Paying only reasonable Plan expenses

A common question is how this may differ from recommendations/responsibilities of a broker. A broker must give “suitable” advice but is not held to the higher standard of fiduciary care. In this Brightscope.com article “Is Your Adviser Held to a Fiduciary or Suitability Standard? There is a Big Difference.”, Andrew Thomas Ullmann of On Investment Management Co, explores these differences and why this may be important to you as a plan sponsor.

At DirectAdvisors we are 3(38) fiduciaries to 100% of the retirement plans we service. We follow the five tenants above methodically to best serve all of our clients and their participants.


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