When you hire a financial advisor, you’re putting your trust — and your money — in their hands. But what most people don’t realize is that not all advisors are required to act in your best interest.
This is where the word fiduciary comes in — and why it matters more than you think.
What Is a Fiduciary?
A fiduciary is someone who is legally and ethically obligated to act in your best interest. This standard is the highest level of care in the financial industry. A fiduciary must:
- Put your needs ahead of their own
- Avoid conflicts of interest (or disclose them fully)
- Be transparent about fees, compensation, and risks
- Provide advice that is suitable and beneficial to you
In other words: a fiduciary works for you — not for commissions or corporate quotas.
Who Is Required to Be a Fiduciary?
Only some financial professionals are held to the fiduciary standard:
- Registered Investment Advisors (RIAs): Fiduciary 100% of the time by law
- Certified Financial Planners™ (CFPs): Required by their certification
- Some fee-only advisors: Especially those who are members of NAPFA or XY Planning Network
Not fiduciaries by default:
- Stockbrokers or registered representatives
- Insurance agents or annuity salespeople
- Bank-affiliated advisors working on commission
These professionals may operate under a suitability standard — meaning they can recommend a product that’s “good enough,” even if it’s not the best (or cheapest) option for you.
Why It Matters
Here’s a simple example:
Say you’re looking to invest $50,000. A fiduciary advisor might recommend a low-cost ETF that charges a 0.10% fee. A non-fiduciary could steer you toward a similar fund with a 1.5% commission and annual fee — not because it’s better for you, but because it pays them more.
Over time, that difference could cost you tens of thousands of dollars in hidden fees and missed returns.
With a fiduciary, you can trust that the advice you receive is:
- Objective
- Transparent
- Focused on your goals
- Not based on product sales
How to Tell If an Advisor Is a Fiduciary
1. Ask directly: “Are you a fiduciary 100% of the time?” Don’t accept vague answers. If they say “sometimes,” that means “no.”
2. Check credentials:
- Look for RIAs or CFP® designations
- Search them on adviserinfo.sec.gov to see their registrations
3. Understand how they’re paid: Fiduciaries are usually fee-only — meaning they charge hourly, flat-fee, or a percentage of assets. They don’t earn commissions on the products they recommend.
Fiduciary vs. Suitability: Key Differences
| Standard | Fiduciary | Suitability |
|---|---|---|
| Client's Best Interest | ✅ Required | ❌ Not required |
| Fee Transparency | ✅ Full disclosure | ❌ Often hidden or commission-based |
| Conflicts of Interest | Must avoid or disclose | Allowed if product is "suitable" |
| Legal Accountability | Yes | Limited |
Common Myths About Fiduciaries
“Fiduciary advisors are too expensive.” Not always. Many offer flat fees or hourly consulting that are accessible to younger or middle-income clients.
“My advisor works at a big brand, so they must be a fiduciary.” Many bank and wirehouse advisors are not fiduciaries. Reputation ≠ obligation.
“Fiduciary means they guarantee results.” No — fiduciaries can’t promise market performance. They’re just legally required to put you first.
When You Should Definitely Work With a Fiduciary
- You’re retiring soon and need a sustainable income plan
- You’re making a big decision — like selling a business or receiving an inheritance
- You want help managing multiple accounts, investments, and taxes
- You’re paying for ongoing financial advice (you deserve conflict-free service)
How to Find a Fiduciary Near You
Search tools:
- napfa.org – Fee-only fiduciary advisors
- cfp.net – Certified Financial Planner™ database
- XY Planning Network – Advisors for Gen X/Y clients
Need Help Choosing?
At Trusted in Town, we personally vet financial advisors to ensure they’re fiduciaries, responsive, and client-first. Whether you need a second opinion, help building a plan, or ongoing guidance, we’ll help you connect with someone who works for you — not for a commission.
Contact us here to get matched with a fiduciary financial professional in your area.