By Hal M. Bundrick NEW YORK ( MainStreet)-- Advisors who have rushed to embrace a fiduciary standard may be facing a looming reality. With great responsibility comes great liability. Richard G. Ketchum, Chairman and Chief Executive Officer of FINRA just placed a carefully aimed warning shot across your bow. In remarks at the recent FINRA annual conference, Ketchum made his concern very clear: "We're worried about investors taking on risks that they either don't understand or cannot afford," he said. Whether the measure of responsibility is the suitability standard of brokerage firms or the supreme fiduciary standard of registered investment advisors, the message is unmistakable. Document your conversations with clients now regarding the risk in their portfolios, especially when it comes to bonds, floating rate loans and private REITS. Also see: When It Pays to Hire a Financial Planner "I don't claim any ability to predict whether inflation will rise or interest rates increase from their historically low levels in the near term," Ketchum said. "But it is clear that interest rates have far more room to go up than down and that history would tell us that, in this environment, the quality of non-investment-grade bonds able to be floated is likely to go down. Accordingly, it is a great time to have conversations with your clients about the risks and possible negative scenarios of concentrated holdings in longer duration or more speculative fixed income securities." Ketchum also noted the inherent hazards of bond funds: "If the market moves, losses will occur instantaneously and there will be no ability to hold a bond to maturity." The recent popularity of floating-rate loan investments is also a bear trap for advisors with short memories. "Funds that invest in leveraged loans attracted a lot of investors in 2012 because of their higher yield and variable interest rates," Ketchum noted. "Unlike traditional fixed income bonds, floating-rate loans do not trade on an organized exchange, making them relatively illiquid and difficult to value. Funds that invest in floating-rate loans may be marketed as products that are less vulnerable to interest rate fluctuations and offer inflation protection. But the underlying loans held in the fund are subject to significant credit, valuation and liquidity risks that may not be transparent to investors."