The fiduciary standard was established as part of the investment advisers act of 1940 and states that the advisor must act in the best interest of the client and place the clients best interest before his or her own.  For instance, faced with two identical investments but with different fees, an advisor under the fiduciary standard would be compelled to recommend the one with the least cost to the client, even if it meant fewer dollars to the advisor.

The other standard, known as the “suitability standard” which may include stockbrokers and broker-dealers, are merely required to recommend an investment choice that is suitable for the client, even if it means the stockbroker receives higher compensation (which can be paid in the form of cash, all expense paid vacations or free equipment all of which does not have to be disclosed).  For instance, recommending a mutual fund with sales loads rather than one without may be suitable for the client but results in higher costs and possibly lower returns.

How to determine if your advisor is acting under the Fiduciary Standard or the lower Suitability Standard

Ask one question – Are you acting under the Fiduciary Standard and will you put that in writing and do you have a copy of your form ADV (SEC/state regulators registration form)?


K-Mack Financial, LLC, as the Registered Investment Adviser and Kevin McKenney as the Managing Member are both required under law to practice under the Fiduciary Standard and as such place the client’s best interest first.