What is a fiduciary financial advisor?

A fiduciary financial advisor is a professional who is legally and ethically obligated to act in their clients' best financial interests at all times. This means they must prioritize your financial goals over their own compensation or any other conflicts of interest.

How do I know if my financial advisor is a fiduciary?

The best way to know is to ask directly: "Are you a fiduciary for all the advice you provide?" Also, ask how they are compensated. Fee-only advisors, who are paid solely by their clients and receive no commissions, are always fiduciaries. You can also check their Form ADV Part 2 for disclosures.

What is the difference between a fiduciary and a suitability standard?

A fiduciary standard requires an advisor to act solely in your best interest, recommending the most appropriate and cost-effective options. The suitability standard, a lower bar, only requires an advisor to recommend products that are "suitable" for you, even if better or cheaper alternatives exist that might pay the advisor less commission.

Why is working with a fiduciary important for my personal finance?

Working with a fiduciary ensures you receive unbiased advice free from conflicts of interest. This can lead to lower fees, better investment performance, and a comprehensive financial plan tailored specifically to your goals, ultimately helping you accumulate more wealth and achieve financial peace of mind.

Do all financial advisors have a fiduciary duty?

No, not all financial advisors have a fiduciary duty. Registered Investment Advisors (RIAs) and Certified Financial Planner™ (CFP®) professionals (when providing financial planning) are typically held to a fiduciary standard. Broker-dealers and insurance agents usually operate under a suitability standard, which is a lower legal obligation.

What questions should I ask a potential fiduciary advisor?

Key questions include: "Are you a fiduciary for all advice?", "How are you compensated (fee-only vs. fee-based)?", "Do you receive commissions?", "What are your qualifications?", and "Can I see your Form ADV Part 2?"

Where can I find a fee-only fiduciary advisor?

You can find fee-only fiduciary advisors through organizations like the National Association of Personal Financial Advisors (NAPFA), the Garrett Planning Network, and the XY Planning Network. The CFP Board website also allows you to search for CFP® professionals who adhere to a fiduciary standard.

Fiduciary Financial Advisor: Unbiased Personal Finance Guide