Financial planning can be complex. From crafting an investment strategy and developing an estate plan to managing risks and handling everyday personal finance matters, the expertise of a good financial advisor can be invaluable. But how do you ensure your financial advisor is truly looking out for your best interests? The key is to determine if your advisor is a “fiduciary.” So, what does it mean to be a fiduciary?

What is a Fiduciary Financial Advisor?

A fiduciary financial advisor is obligated to recommend the best investment solutions for their clients. Unlike non-fiduciary advisors who only need to suggest “suitable” options, fiduciary advisors must adhere to a higher standard, ensuring their recommendations are in the clients’ best interests.

Before hiring a financial advisor, it’s crucial to explicitly ask if they will always act as a fiduciary. Knowing what to look for and the right questions to ask can help you identify fiduciary advisors more easily today.

Certified Financial Planners (CFPs) as Fiduciaries

One reliable way to ensure your advisor acts as a fiduciary is to hire a Certified Financial Planner (CFP). CFPs commit to the CFP Board’s Code of Ethics and Standards of Conduct, promising to act as fiduciaries when providing financial advice.

This commitment means a CFP professional prioritizes each client’s well-being above their own or their firm’s interests. Fiduciary duty also requires them to disclose any material conflicts of interest. They must act with care, skill, prudence, and diligence to best serve their clients’ goals and comply with all relevant laws and regulations.

Understanding the Term “Fiduciary”

Despite its importance, the term “fiduciary” is not widely understood. Many investors are misled by vague titles like “financial advisor” or “senior planner.” Beware of quick certification programs that can be completed in just a few days, which some advisors use to claim expertise.

Finding a fiduciary advisor is challenging because the responsibility falls on the individual. Most people lack financial expertise and the time to thoroughly research advisory firms to identify the right fiduciary for their needs.

The Importance of a Fiduciary Advisor

Why is it so vital for your financial advisor to be a fiduciary? Without this obligation, advisors might recommend products that are not optimal for your situation but generate higher commissions and fees for them. Non-fiduciary advisors might also suggest complex and opaque products to prevent clients from questioning their strategies.

Mitigating Conflicts of Interest

Fiduciary financial advisors mitigate conflicts of interest by often choosing not to offer certain products directly. Instead, they might recommend clients purchase these products elsewhere. When they do offer specific products or services, fiduciary advisors disclose any conflicts of interest, prioritize their clients’ interests, and act without regard to their own financial gain.

Cost of Working with a Fiduciary

Hiring a fiduciary advisor is not necessarily more expensive than hiring a non-fiduciary. Fiduciaries often work on a fee-only basis, which might involve an annual planning charge of a few thousand dollars. Many advisors use a fee structure based on “assets under management,” where clients pay a percentage of their portfolio value each year, typically no more than 1%.


A fiduciary advisor is required to act solely in their clients’ best interests, placing the client’s financial needs above their own. In a landscape filled with complex and opaque investment products, working with a fiduciary is more crucial than ever.