What is Fiduciary Responsibility?

 

Fiduciary Responsibility requires an investment advisor, by law, to act in the best interest of the client, putting the clients’ interests ahead of their own at all times.  Having Fiduciary Responsibility requires an investment advisor to provide advice and investment recommendations that he/she views as being the best for the client.  In addition to being obligated to put clients’ interests ahead of their own, fiduciaries must also adhere to the duties of loyalty and care.  An investment advisor that has a material conflict of interest must either eliminate that conflict or fully disclose to its clients all material facts relating to that conflict.

 

Does MPI have Fiduciary Responsibility?

 

Yes, MPI Investment Management, Inc. and all of their employees have a fiduciary responsibility to put your interests before ours. MPI is a registered investment adviser and not a broker. 

 

What is the difference between MPI and a Broker?

 

Brokers are generally not considered to have a fiduciary responsibility to the client.  Brokers are able to avoid the higher legal standard of fiduciary responsibility due to an exemption they receive from the definition of Investment Adviser (fiduciary).   Brokers have many different titles these days with some of the more common being:  wealth manager, wealth advisor, investment consultant, financial advisor, financial consultant and registered representative.  Brokers are generally not considered to be fiduciaries because their advice is merely incidental to the sale of their products.  Instead of being obligated to put their customers’ interests ahead of their own, brokers are instead expected to deal fairly with their customers and adhere to the lower standard of legal care, known as the suitability doctrine.  The suitability doctrine requires a broker to know her customer’s financial situation well enough to recommend investments that are considered suitable for that particular client.