How does the CFP fiduciary standard differ from a suitability standard?

• A. The fiduciary standard requires only compliance with laws.
• B. The fiduciary standard means the adviser must always maximize own compensation.
• C. The fiduciary standard requires acting in the client's best interest, but disclosure and avoidance of conflicts are optional.
• D. The fiduciary standard requires acting in the client's best interest with full disclosure, avoidance of conflicts, and suitable advice.

Answer: (D)

The key idea here is how a fiduciary duty differs from a suitability standard in advisory relationships. Under a suitability standard, advisers must recommend investments that are appropriate for the client’s situation, but they aren’t required to put the client’s interests first or to disclose all conflicts of interest.

The fiduciary standard, however, requires acting in the client’s best interest at all times. It demands full and fair disclosure of all material facts that could influence the client’s decisions and requires advisers to avoid or properly manage conflicts of interest. In practice, this means every recommendation should be guided by what’s best for the client, with transparent disclosures about compensation and conflicts, and the advice must be suitable for the client’s goals and circumstances.

So the correct description is that the fiduciary standard involves acting in the client’s best interest with full disclosure, avoidance of conflicts, and suitable advice.