The legal responsibilities in managing or advising on your investments are different between a Registered Financial Advisor and a Broker. Registered Financial Advisors, like Coign, have to meet a higher standard of care as we are technically fiduciaries.
A fiduciary is a person who legally acts on behalf of someone else. It is often seen in estate law. In the context of investing, it means that we are legally (and not just morally) required to put your well-being, and the well-being of your investments, ahead of any personal or firm interest.
There are other, stringent, standards of care, or duties, when it comes to being a fiduciary. These include a duty to act loyally, and a duty to act in good faith on your behalf. Each of these duties is attached to a legal code with decades (or centuries) or precedent, laying out in detail what a fiduciary can and can’t do on your behalf.
A broker, on the other hand, has to meet a legal “Suitability Standard'' when it comes to investing your capital. It still requires the broker to legally do what is best for you and your money, but it does not require them to put your needs wholly above their own. This is usually not an issue, but, crucially, can become one, especially in commissions-based structures, as the broker is legally allowed to consider their needs (and their commissions) at the same time they are considering yours.
We believe a fiduciary relationship gives you more legal protection and a clearer understanding of the investing partnership, while at the same time removing the risk of self interest on the part of anyone managing your money.
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During the holiday season, consider donating to qualified charitable organizations that qualify as an itemized deduction when making your holiday gifts.