Under the fiduciary standard, financial firms and professionals are required to act in the best interests of their clients. They are supposed to disclose conflicts of interest. The fiduciary standard also requires that financial professionals and financial firms not put maximizing their own compensation and earnings ahead of their clients' interests.
The fiduciary standard, however, applies by law only to a subset of key players in the financial services industry. Many are, instead, subject to the lower suitability standard. Under federal legislation dating to 1940, the definition of money managers and investment advisors subject to the fiduciary standard is relatively narrow and highly technical. There are increasing calls for securities sales people such as financial advisors and insurance agents to be made subject to the fiduciary standard.
