Discussion Case Study | Conflicts of Interests and Fiduciary Duties in the Financial Industry
Discussion Case Study | Conflicts of Interests and Fiduciary Duties in the Financial Industry Please write comments on questions 1 and 2 in more than 4 sentences. (Question 1): What difference do you see between the fiduciary standard and the suitability standard? Is one more ethical than another? Justify your answer. The difference I see between the fiduciary standard and the suitability standard is “accountability.” The fiduciary standard holds the advisor at a high standard due to the knowledge and expertise he/she has that in general that client lacks. This yields the strongest protection for the client. The suitability standard appears to be based on the limited knowledge the client gives to the advisor. The advisor moves on that knowledge alone, with little to no professional input. If it “suits” the client then the advisor is okay. Thus, I believe that the fiduciary standard is more ethical than the suitability standard as the fiduciary standard requires the advisor to act at a higher level of consciousness towards the client, which builds trust and honesty in the relationship. Suitability leaves out vital knowledge that can be useful in the client making a more informed decision, which can be misleading and misguiding. (Question 2): In what ways are financial advisors like doctors and lawyers? In what ways do they differ? both doctors and lawyers do everything they possibly can for their clients. They work for their clients . They provide the best advice possible. They try to solve problems for their clients. They constantly check up on their clients using data received from the clients . They are usually licensed and are credited as a professional in their field. Some ways they differ are obviously doctors work in medical facilities while finance advisors work in banks and lawyers work in government courthouses. The payment would be different depending on the profession as well. Doctors deal with health risks , lawyers help with defending you by the law and financial advisors help with your financial risks if possible.
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