Q) Does Carlsbad Wealth Advisory Group follow the Fiduciary Standard or the Suitability Standard of care?
A) All RIAs including Carlsbad Wealth are required to follow the Fiduciary Standard of Care. We are very
much in favor of the proposed legislation requiring all brokers and advisors to be bound by the Fiduciary Standard.
Q) What’s the difference between the Fiduciary Standard of Care and the Suitability Standard?
A) In general, brokers who charge commissions are under the Suitability Standard and advisors
that only charge a fee based on assets under management are required to follow the Fiduciary Standard.
The Suitability Standard is essentially the method that brokers use to evaluate how much and which products
can be sold to a client. Does the client have enough to pay for the policy/investment? Could an argument be
made that the policy/investment might be a good idea?
The Fiduciary Standard is better defined and geared toward the best interest of the client rather than the
professional. The client’s best interests always comes first. An advisor is bound to follow the prudent man
rule, i.e. do what a prudent and skilled investment professional would do. Do not mislead clients and fully
disclose all important facts. Disclose unavoidable conflicts and avoid all other conflicts of interest.
Q) Is CWAG part of Schwab or Fidelity?
A) No. CWAG is a privately owned
and operated Registered Investment Advisory firm.
We primarily use Schwab and Fidelity to custody client
assets although we are not part of, or compensated
by either company.
Q) How are you compensated?
A) Carlsbad Wealth Advisory Group is an independent,
fee-only Registered Investment Advisory firm and compensated according to our fee schedule which can
be viewed on our Fees & Minimums page and also
in our SEC ADV Part II.
Q) What does “fee-only” mean?
A) While many broker/advisors are compensated by loads and
commissions typically hidden from the client, fee-only
means compensation is only received directly from
the client and not from mutual fund companies, brokerage
firms, or any source unknown to the client. Commissions
and loads create an incentive for an advisor to “sell” a
recommendation. On the other hand, fee-only advisors
are free to recommend what’s best for the client
because compensation is not part of the equation.