Broker Check

Fiduciary vs. Reg BI

Is Sherpa Financial Advisors a fiduciary company?

This is a common question asked to us by prospective clients as there has been much focus in our industry on working with an advisor who acts as a fiduciary. In a general sense, the word fiduciary means “of, relating to, or involving a confidence or trust”.

While Sherpa Financial Advisors has always put the best interest of our clients first when advising and making recommendations, there have been some in our industry that have not. Therefore, The Securities Exchange Commissions (SEC) recently passed an updated Standard of Care policy governing the conduct of Broker-Dealers (such as The Strategic Financial Alliance "SFA" with whom we are registered) and their representatives (such as Sherpa Financial Advisors). The updated regulation became effective June 30th, 2020 and is called Best Interest - also known as Reg BI. Reg BI requires Broker-Dealers and representatives to act in the best interest of the client at the time a recommendation is made, without placing the financial or other interest of the Broker-Dealer or representative ahead of the interests of the client. The new regulation doesn’t change anything in our approach or how we serve our clients as we have always functioned in this manner.

In our profession, advisors can act in two general capacities – either under the umbrella of a Broker-Dealer when earning a commission on an investment transaction or 2) as an investment adviser when acting in an advisory role. Below are brief overviews of each capacities:

When acting in the first scenario under the Broker-Dealer, advisors are regulated under the Reg BI Rule. Reg BI does not extend into the role of an advisor when offering advisory services as an Investment Adviser. Instead, the advisor operates as a Fiduciary in that role. Regardless of the role and the definitions of the governing regulations, Sherpa Financial Advisors approaches each client, their situation and the guidance we provide with a client-centric focus.

As part of the Reg BI regulation, the SEC requires a Client Relationship Summary to be provided to clients, which describes the type of services being provided when your advisor is acting under the Broker-Dealer or as an Investment Adviser.

Sherpa Financial Advisors Representatives are dually registered and can act under both the Broker Dealer (Reg BI) and an Investment Advisor (Fiduciary) under different situations. To help you learn more about when we’re acting as one or the other, read our Customer Relationship Summary (CRS).

We understand you’re likely to have questions and encourage you to schedule a meeting with us to answer them.