Words Mean Things

• Guidance: a person who exhibits and explains points of interest. 
• Investment Guidance: provides information, education and tools to help participants make investment decisions, but it requires them to make their own decision as to how it applies to their specific situation.

• Advice:  recommendation regarding a decision or course of conduct.
• Investment Advice: provides participants with specific recommendations on how to invest. Investment advisors are subject to the Investment Advisors Act of 1940. This Act requires that certain steps be taken by advisors, such as conducting a suitability analysis before advice can be given. This analysis considers individuals' total financial picture, investment objectives and risk tolerance to ensure recommendations are appropriate for their specific situation.

When you look at the websites and advertisements of Fidelity, Schwab, Merrill Lynch and Edward Jones you will see the word "guidance" used a lot. There is a big difference between "guidance"and

"advice"when receiving information about your personal finances.

The reason they use guidance is because it implies a lower standard of care for financial decisions and ultimately leaves decision making up to the client. For instance, they won't tell you what specific mutual fund you should buy inside a 401(k). Instead they will give "guidance" on the asset allocation and offer general ideas on investing. They do this so they can keep earning big commissions and back door revenue streams and to avoid a higher standard of care, a fiduciary standard, that places the clients interests first.

Advice, like that given by advisors at Registered Investment Advisor firms, always puts the clients interests first. Because we are paid by our clients, we have no incentive to recommend a product or service unless it is in your best interest.