Fiduciary Standard The fiduciary standard -- What is that?When it comes to financial reform, individuals should pay the most attention to the regulations surrounding the fiduciary standard. It sounds complicated, but it essentially refers to the guidelines that spell out the obligations financial services professionals have to their clients.Currently, there are two standards that advisors and financial planners are held to -- the suitability standard and the fiduciary standard. The suitability standard gives advisors the most wiggle room: It simply requires that investments must fit clients' investing objectives, time horizon and experience."You can satisfy the suitability standard by recommending the least suitable of the suitable options, as long as it falls within the general suitability test," says Barbara Roper, director of investor protection for the Consumer Federation of America.The suitability standard invites conflicts of interest pertaining to compensation, which can vary greatly from one product to another.And you don't have to disclose your conflicts of interest. You don't have to appropriately manage your conflicts of interest or minimize your conflicts of interest. So what that means is often the products that are best for the broker have higher costs for the investor.The other standard of care, the fiduciary standard, basically charges advisors with putting their clients' best interest ahead of their own. For instance, faced with two identical products 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 in the company's coffers -- and his or her own pocket.Unfortunately, many investors can't distinguish among financial planners and advisors. Studies have shown that individual investors don't know who is a fiduciary or what a fiduciary actually is.How to discern among financial advisorsThe majority of investment advice providers are not trying to rip people off. But it's hard for average investors to know which type of advisor is held to what type of standard -- suitability or fiduciary.For broker-dealers that are held to a suitability standard, the compensation system is set up in a way that can lead to conflicts of interest. But TV advertising suggests otherwise."You can never educate investors to understand that their financial advisor is a salesperson who doesn't have to act in their best interest when multi-million dollar marketing campaigns are designed to lead them to exactly the opposite conclusion," says Roper. "The titles and the descriptions of the services are designed to make them think they are in a trusted advisory relationship."Increasing investors' education would go a long way toward unveiling the information gaps that currently exist between professionals and their clients. Many times investors don't know a lot about the products they are sold, but they should, at the very least, know what kind of advisor they're working with.Questions to ask your advisorAre you acting under the fiduciary standard? Can you put that in writing?Which licenses do you have?Are you a registered investment advisor? Can I get a copy of your form ADV (SEC/state regulators registration form)?If you are not acting as a fiduciary, are you willing to fully disclose all conflicts of interest and the amount of compensation received from advice and products recommended?