As a registered investment adviser, Boston Portfolio Advisers is obligated by law and custom to act as a pure fiduciary on behalf of its clients just like their lawyer or accountant. For example, it takes no compensation from third parties and has no other incentive or interest to pursue. Boston Portfolio Advisers only charges a percentage fee that rises or falls in dollars with account value. Beyond the requirements of the law, Boston Portfolio Advisers has adopted a “Pledge to Client’s to fully align its interests with those of its clients.
In contrast, a securities broker is not a fiduciary. It is a principal, not an agent, and the individual representative may have compensation arrangements that greatly influence his or her judgment. While a fiduciary is required by law to put the client’s interests above its own, a broker is free to select investments based on his or her own financial incentives so long as they meet the very general requirement of “suitability.”