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This question is about what a broker does and broker.
Fiduciary vs. Broker
A fiduciary is a person that acts in the best interest of their clients, avoids conflicts of interest, and can only buy or sell investments that are in the best interest of their clients. While a broker can recommend investments that they reasonably believe are suitable.
A fiduciary is an individual or organization that is required to act in the best interest of their clients at all times. They have a bond of trust and are held to strict rules called the fiduciary standard of care. They can only be paid through fee-based compensation. Types of fiduciaries include attorneys, investment advisors, and real estate agents.
A broker is a professional licensed through the Financial Industry Regulatory Authority to participate in the exchange of goods and services. They can receive commissions on the products they sell and can recommend products or investments they believe are suitable even if a better option exists.
There are many differences between a fiduciary and a broker including how they perform their work and their legal responsibilities.
Here are the key differences between a fiduciary and a broker:
A fiduciary must uphold their clients' best interests at all times
A broker is held to different legal standards and is not required to avoid conflicts of interest
A fiduciary is paid only through fee-based compensation which eliminates any conflict of interest on investment recommendations and plan level decisions
A broker receives a commission and can therefore recommend products that give them a higher wage even if a better one exists for the client
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