In our previous two blog posts, we discussed essential things to consider before hiring a financial advisor and questions you should ask a financial advisor when interviewing them. In this final post in our series, we want to cover what a true “fiduciary” is.
The word "fiduciary" gets tossed around a lot in the financial world, but what does it actually mean—and why should you care? Let’s jump in!
A fiduciary is legally obligated to put your interests first. That’s it in a nutshell. But here's why it matters:
- They Work for You, Not a Commission
Fiduciaries aren't incentivized to sell high-commission products. Their recommendations are based solely on what benefits you, not what benefits them or their firm. - They're Held to a Higher Standard
Unlike brokers or insurance agents who only have to meet a "suitability" standard, fiduciaries must meet a "best interest" standard. This means they must do what is in your best interest, not just what may be suitable in certain situations. This is a key distinction because you want to know that all recommendations from your advisor are what are in your best interest. - You Get Greater Transparency
Fiduciaries are legally required to disclose any and all conflicts of interest and provide clarity around fees, compensation, and the advice they give. This is important because you always want to know if any advice they are giving is driven by alternative motives. - Your Goals Come First
They'll help you build a plan around your life—not try to fit your life into a plan built to sell products.
How to Know If Your Advisor Is a Fiduciary:
- Ask directly: "Are you a fiduciary at all times?"
- Look for fee-only advisors affiliated with organizations like NAPFA or the CFP Board.
Bottom Line: Choosing a fiduciary isn’t just a technicality. It’s a way to make sure your money is managed with care, transparency, and your goals front and center.
Need help choosing the right advisor for you? Let’s talk about what matters most to you and how a financial plan can support it.