Suitability versus fiduciary  may be a distinction that goes away of the new SEC rules are enacted across the board. The Abernathy Group II Family Office  has put the needs of its clients first since it was founded and spells out the three key considerations for investors.

As the Securities and Exchange Commission contemplates its new, uniform standard of ethics for all  financial  advisers, for all the years it’s been in existence,  The Abernathy Group II Family Office  has upheld the  fiduciary  standard – as this is a cornerstone of the Family Office model. Marc Schoeff Jr.’s recent article is a fascinating look at the “how to” and the “how much” to bring  broker dealers  up to speed to best serve the interests of their investors.

Three things those investing need to consider now are:

#1: Pricing and costs can change; and these increases will be passed to investors.

The estimated cost of upgrading systems to meet the new standards, according to the  Securities  Industry and Financial Markets Association (SIFMA), is around $5 million dollars per company. It’s highly likely these “new costs”—if commissions, fees, front-end loads, and other incentives are eliminated—will show up in higher fees across the board. According to Mr. Schoeff’s article, “. seven firms estimated that if brokers were to adopt disclosure forms similar to those that investment advisers use at the beginning of a client relationship, it would cost about $3 million per firm annually.” Who will cover these costs? The pain points in lost commissions are likely to result in increases in fees.

#2: Determining who is serving the investor’s interests, 100% of the time, still may not be clear—even under the new rules.

“Today, broker dealers are able to wear both hats, fiduciary and salesperson, which is legal, just not ethical,” according to Brian Luster, CEO and co-founder of The Abernathy Group II Family Office. “Family Offices like ours adhere to the fiduciary standard as we are, without question, legally bound to place the best interests of our clients above our own.”

If these new regulations go into effect, broker dealers must choose one hat only to clarify their role.

#3: New rules will invariably affect established relationships.

The National Association of Personal Financial Advisors counts over 1 million financial representatives—yet less than 3,000 are registered fiduciaries. Essentially, this could mean over 1 million people will essentially be thrust into a different job function where they have little or no experience and need to learn the ropes of fiduciary responsibilities and legal obligations to clients vs. sales goals.

Steven Abernathy, Chairman and co-founder of The Abernathy Group II Family Office, states: “Our Family Office model isn’t and has never been incumbent upon sales or commissions—we’ve adhered to our fiduciary responsibility long before the SEC’s proposal since serving clients in the most transparent manner possible is why we came into existence.”

“On the one side, the banks, brokerages and insurance companies want such yet-to-be-defined rules to let them keep receiving commissions for selling  investment  products. In the dual-standard system now in place, their brokers only are required to make sure what they sell is suitable for clients,” writes Corrie Driebusch in her recent WSJ article .

How can investors remain protected? Abernathy recommends they only employ established, fiduciary  representation at all times. It would seem the government now agrees.

About The Abernathy Group II Family Office:

Steven Abernathy and Brian Luster co-founded The Abernathy Group II Family Office and the countrys first Physician Family Office (PFO). The Abernathy Group Family Office sells no products, receives no commissions, and is independent, employee-owned, and governed by its Advisory Board comprised entirely of thought-leading professionals. They are regular contributors to several publications and blogs including The Huffington Post.