What are the two primary fiduciary duties required of both registered investment advisers and CFP professionals?

What are the two primary fiduciary duties required of both registered investment advisers and CFP professionals?

• A. Care and loyalty
• B. Loyalty and disclosure
• C. Loyalty and following client instructions
• D. Disclosure and care

Answer: (A)

Loyalty and care are the core fiduciary duties for both registered investment advisers and CFP professionals. Loyalty means placing the client’s interests first and avoiding conflicts or fully disclosing any conflicts so they don’t bias the advice. It’s about always acting with the client’s best interests in mind, even when a different outcome might benefit the adviser or the firm. Care means providing competent, thorough analysis and advice. This involves understanding the client’s objectives, risk tolerance, time horizon, and financial situation; evaluating investments for suitability and costs; and monitoring the strategy over time to ensure it remains aligned with the client’s needs. Disclosures are important and relate to loyalty, but they’re not the two primary duties themselves, and simply following client instructions without applying due care could violate fiduciary standards.

Loyalty and care are the core fiduciary duties for both registered investment advisers and CFP professionals. Loyalty means placing the client’s interests first and avoiding conflicts or fully disclosing any conflicts so they don’t bias the advice. It’s about always acting with the client’s best interests in mind, even when a different outcome might benefit the adviser or the firm.

Care means providing competent, thorough analysis and advice. This involves understanding the client’s objectives, risk tolerance, time horizon, and financial situation; evaluating investments for suitability and costs; and monitoring the strategy over time to ensure it remains aligned with the client’s needs.

Disclosures are important and relate to loyalty, but they’re not the two primary duties themselves, and simply following client instructions without applying due care could violate fiduciary standards.