When searching for financial guidance, most people assume the person sitting across from them will always act in their best interest.
Sadly, that’s not always the case.
The financial industry includes professionals who are legally required to put your interests first—and others who are not. This distinction can have an immense impact on the advice you receive, products offered, and ultimately, the outcomes you experience over time.
As fiduciaries ourselves, we’re continually frustrated by the lack of accountability and transparency amongst financial professionals today. When it feels like the industry is taking one step forward, regulatory changes or law reversals take it two steps back. This makes it infinitely harder for clients to understand who’s acting in their best interests and where potential costly conflicts may lie.
Navigating who may serve in a fiduciary capacity and who won’t is one of the most important steps you can take to protect your financial future. Here’s what you need to know about understanding the difference.
Defining the Term “Fiduciary”
A “fiduciary” is a person or organization that has a legal obligation to act in the best interest of another party.
In the context of financial advice, this means an advisor must place their client’s interests above their own when making recommendations or providing guidance. This is an enforceable act under regulatory standards and overseen by either federal or state regulators.
Under this standard, fiduciary advisors are generally required to:
- Provide advice that is prudent, objective, and loyal to the client
- Avoid misleading statements about fees, conflicts of interest, or investment strategies
- Act in accordance with policies designed to ensure recommendations serve the client’s best interest
- Charge reasonable compensation relative to the services provided
- Disclose and appropriately manage any conflicts of interest
This legal duty establishes a higher standard of care than what applies to many other financial professionals. It governs not only the recommendations an advisor makes, but also how those recommendations are formed, disclosed, and implemented on behalf of the client.
Recent Rule Changes Muddy the Waters
Regulatory changes in recent years have made it harder for consumers to understand who is required to act as a fiduciary.
In March 2026, the Retirement Security Rule was vacated by a federal judge.1 This rule was originally intended to expand the definition of a fiduciary to include more financial professionals. Specifically, agents and advisors offering one-time advice, such as retirement plan rollovers.
Before it was reversed, the rule aimed to:1
- Extend fiduciary responsibility to insurance agents and registered representatives
- Cover one-time advice, not just ongoing advisory relationships
- Close long-standing gaps in the original 1975 ERISA definition
Now that the rule has been vacated, many financial professionals (namely those selling insurance products and annuities) are no longer held to a fiduciary standard when giving advice. They can continue operating under models where compensation is tied to product sales, even when clients may assume they’re receiving objective guidance.
How to Determine if Someone Is a Real Fiduciary
One of the simplest ways to determine whether someone is a fiduciary is to understand how their firm operates.
Independent advisors are product agnostic. They are not tied to a larger institution. They’re free to explore the widest range of strategies, solutions, and products available. This gives them a greater ability to find the best fit for each individual client.
Advisors who operate under a broker-dealer may maintain some independence, but they are typically required to push products and leverage strategies only offered through their institution. Broker-dealer advisors are not held to the fiduciary standard. Rather, they’re subject to a “suitability standard,” meaning they must work in their client’s “best interest.” This is a notable distinction from the fiduciary standard, which requires fiduciaries to place their clients’ interests above their own.
In addition to understanding how your advisor operates, below are a few other steps you can take to determine which advisors act as true fiduciaries for their clients.
Ask How They Get Paid
There are three common ways a financial professional gets paid:
Fee only: A true financial fiduciary will operate as fee-only. The only compensation they receive comes directly from their client. They do not receive commissions for selling products or kickbacks on referrals.
Commission-based: With a commission-based relationship, the client pays nothing for the professional’s services. The only compensation received comes from commissions on sold products and insurance policies. A commission-based advisor or agent has no fiduciary duty towards their client.
Fee-based: A more recently offered hybrid of the two, an advisor who is fee-based may charge for their planning and investment management services, while receiving commission for certain products or policies sold. In their capacity as an investment manager, they may maintain a fiduciary duty to their client. But with the ability to earn commission on certain products sold, an inherent conflict of interest still exists.
Get It In Writing
It’s hard to hold someone fully accountable for what they say during a Discovery or introductory call. But once a financial professional has declared their status as a fiduciary on paper and signed it, it’s much easier to hold them legally accountable for acting in your best interest.
Review Their Form ADV
Every advisor is required to provide clients with a Form ADV. It’s full of legal jargon and disclaimers, but Part 2A includes information on how the advisor is paid and what potential conflicts of interest exist.
Notably, commission-based agents are not required to have a Form ADV. If an advisor you’re considering working with is not able to provide this disclosure, they are not a fiduciary and likely earn commission.
Check Their Credentials
Certain designations or certifications require advisors to maintain a fiduciary duty. The CERTIFIED FINANCIAL PLANNER™ designation, for example, is one of the hardest designations to achieve and holds its professionals to some of the most rigorous ethical standards.
Advisors and planners also need to have certain licenses to operate, sell investments, and manage other people’s money. Most of these are managed through the Financial Industry Regulatory Authority (FINRA). If you’d like to look up an advisor’s active licenses and registrations, you can do so through FINRA BrokerCheck or the SEC’s Investment Adviser Public Disclosure website.
Don’t Ignore Red Flags
On both the FINRA BrokerCheck and SEC’s Investment Adviser Public Disclosure websites, you’ll find disclosures of any previous disciplinary action the advisor or firm may have been involved in.
Simple enough, if there’s no previous disciplinary disclosure, that’s a good sign. Just keep in mind, no disclosures doesn’t necessarily mean they’re acting in your best interest.
Don’t forget to check for online reviews as well. Within the last few years, the SEC updated its ruling on allowing reviews and testimonials for financial advisors. If you do find reviews, just check for any additional disclosures regarding payment or services in exchange for them.
Working With WealthChoice
As a fee-only firm, our incentives are 100% aligned with your success. We built our practice to best serve hardworking women like you. To us, there’s simply no other choice than to put your needs first. We firmly believe that when our clients succeed, we share in their success.
Our founder, Bridget Venus Grimes, is a CERTIFIED FINANCIAL PLANNER™ professional and CFP Board Ambassador. She founded WealthChoice with a simple mission: Empower women to take control of their financial lives and make confident decisions as the breadwinners in their families.
If you’d like to learn more about what working with a fiduciary really means for your wealth, we encourage you to reach out to our team today.
Sources
1 https://www.irionline.org/wp-content/uploads/2026/03/2026.03.17-82-Order-and-Final-Judgment.pdf
