When searching for a financial advisor, the word "fiduciary" will come up often, and for good reason. It's arguably the most important filter you can apply.
In This Guide
The Simple Definition
A fiduciary is legally and ethically obligated to act in your best interest at all times. When an advisor holds fiduciary status, they cannot recommend an investment product simply because it pays them a higher commission. Your interest comes first, always.
Fiduciary vs. Suitability Standard
Many broker-dealers operate under a "suitability" standard, which only requires that a recommendation be suitable for you, not necessarily the best option. That gap can cost investors thousands of dollars over time through unnecessary fees and suboptimal products. Fiduciaries are held to a higher bar.
Who Is a Fiduciary?
Registered Investment Advisors (RIAs) registered with the SEC or state regulators are legally required to act as fiduciaries. CFP® professionals must also adhere to a fiduciary standard when providing financial planning services. Broker-dealers and insurance agents are not automatically fiduciaries.
How to Verify Fiduciary Status
Ask directly: "Are you a fiduciary at all times, for all services you provide?" You can also verify an advisor's registration status on the SEC's Investment Adviser Public Disclosure (IAPD) website or FINRA BrokerCheck. Look for advisors registered as Investment Advisers rather than broker-dealers only.
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