Fiduciary standard

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Q

What’s a “fiduciary” standard? — A.H., Burley, Idaho

A

A fiduciary standard requires people who might give you financial advice to act in your best interest, recommending or doing whatever will serve you best and avoiding any conflict of interest.

Some advisers (like broker-dealers) may simply abide by a “suitability” standard, recommending or doing whatever is suitable for their clients. What’s suitable, though, may not be what’s best — and it might earn them a sales commission that a better move for you might not. Indeed, among your options for suitable investments, a nonfiduciary adviser might recommend the least suitable one. (Of course, many nonfiduciary advisers are still ethical and may serve you well.)

Supreme Court Justice Benjamin Cardozo famously referred to the fiduciary standard by noting, “A trustee is held to something stricter than the morals of the marketplace.”

When you’re looking for financial advice, it’s smart to ensure that your adviser is held to the fiduciary standard, looking out for your best interest before his or her own. Registered Investment Advisers (RIAs) and Certified Financial Planners (CFPs) are generally held to the fiduciary standard.

Q What’s an 8-K report?

— L.C., Lexington, Kentucky

A Publicly traded companies in the U.S. are required by the Securities and Exchange Commission to release financial reports every quarter. If certain notable things happen between those reports that may impact the company’s health or performance, then an 8-K, or “current report,” must be filed. An 8-K might report a completed merger or acquisition, a bankruptcy filing, a change in top leadership, layoffs, or plant closures, among other things. You can look up SEC filings at SEC.gov.