What this article covers
Not every financial advisor is legally required to act in your best interest — and the difference can cost you thousands of dollars over a lifetime of investing. The term “fiduciary” describes advisors who are held to a higher standard than merely recommending “suitable” products. This article explains what the fiduciary standard means in practice, which credentials and affiliations reliably signal fiduciary status, how to verify whether your current or prospective advisor is a fiduciary, what working with a fiduciary actually costs, and how to find one on Wealthtender.
Financial planning is complicated. Developing an investment strategy, creating an estate plan, ensuring proper risk management, and even many everyday personal finance matters may require the help of a good financial advisor. But is your financial advisor a “fiduciary”? And what exactly does “fiduciary” mean?
What is a Fiduciary Financial Advisor?
In short, a fiduciary financial advisor must recommend the best investment solutions for their clients. It is not enough that a product is simply “suitable.” A higher standard applies to a fiduciary advisor.
You shouldn’t assume a financial advisor is a fiduciary, and before you hire an advisor, you should ask explicitly if they will always act in your best interest as a fiduciary. Fortunately, you can easily find fiduciary financial advisors today if you know what to look for and the right questions to ask.
Key Takeaways
A fiduciary financial advisor is legally required to act in your best interest — not merely recommend products that are “suitable” — and this distinction can significantly affect the quality of advice you receive.
The suitability standard only requires that an advisor’s recommendation be appropriate for your general situation. The fiduciary standard is meaningfully higher: the advisor must recommend the best option available for you specifically, fully disclose any conflicts of interest, and act with care, skill, and prudence. In practice, a non-fiduciary advisor could legally recommend a higher-fee investment that pays them a larger commission as long as it’s “suitable” — a fiduciary cannot.
CFPs, CFAs, NAPFA members, and RIAs registered with the SEC are among the most reliable indicators that an advisor is held to a fiduciary standard — but you should still ask directly.
The CFP Board’s Code of Ethics requires all CFP professionals to act as fiduciaries when providing financial advice. CFA charterholders agree to a similar fiduciary duty. NAPFA membership requires fee-only fiduciary status. SEC-registered RIAs are held to a fiduciary standard by regulation. However, some advisors hold fiduciary credentials in only some contexts — so the safest step is to ask explicitly: “Will you always act as a fiduciary in our relationship?” and get the answer in writing.
Working with a fiduciary doesn’t necessarily cost more — and the fee-only model, where fiduciaries are most common, is often the most cost-transparent arrangement available.
Fiduciary advisors frequently work on a fee-only basis — charging a flat fee, hourly rate, or percentage of assets with no commission income — which means their compensation isn’t tied to the products they recommend. A quality fiduciary advisor working under the AUM model typically charges around 1% annually or less, comparable to non-fiduciary advisors. The real cost difference often comes from avoided losses: the products a fiduciary steers you away from may cost far more over time than the advisory fee itself.
How CFPs, CFAs, and Other Credentialed Advisors Meet the Fiduciary Standard
One way you can be sure your financial advisor will act as a fiduciary includes hiring a Certified Financial Planner, often referred to as a CFP. Upon earning the Certified Financial Planner designation, each CFP acknowledges they will adhere to the CFP Board’s Code of Ethics and Standards of Conduct and act as a fiduciary when providing financial advice to their clients.
This means the CFP professional places each client’s well-being above their own and that of the firm for whom they work. Moreover, the fiduciary duty requires the proper disclosure of material conflicts. In practice, the advisor must act with care, skill, prudence, and diligence so that they can best serve the client’s objectives. Finally, the advisor must comply with all laws and regulations.
Why “Fiduciary” Can Be Hard to Verify — and What to Watch Out For
What is problematic today is that the term “fiduciary” is still not widely known and understood. Many investors are fooled by generic terms such as “financial advisor” and “senior planner” when seeking an advisor. Be careful. Believe it or not, there are so-called certification programs that can be completed in a few days that some advisors use to suggest expertise.
Making it all the more challenging to research and find a fiduciary advisor is that the onus is on the individual. Most people are not financial experts. They also do not have the time to sift through dozens of advisory firms to find the right fiduciary for their situation.
What’s at Stake When Your Advisor Isn’t a Fiduciary
Why is it so important that your financial advisor be a fiduciary? If your advisor is not working in your best interests, then he or she might attempt to sell you a product that is not the best for your individual situation.
For example, a sub-optimal investment solution might line the advisor’s pocket with commissions and high-fund fees, more than it helps you achieve your long-term goals. Or a non-fiduciary advisor could recommend complex products and portfolios uneasy to understand, in hopes clients won’t call their strategy into question.
How Do Fiduciary Financial Advisors Mitigate Conflicts of Interest?
In order to reduce conflicts of interest, many fiduciary financial advisors may choose to not offer certain products directly, and instead, recommend their clients purchase products elsewhere. In other instances, when fiduciary advisors offer their clients certain products or services, they will disclose any conflicts of interest regarding their recommendation, place their clients’ interests ahead of their own, and most importantly, act without regard to their financial interests.
We asked fiduciary financial advisors if there are products or services they don’t offer directly as a fiduciary but do sometimes recommend their clients consider purchasing. Here’s what they had to say:
“I might sometimes recommend a SPIA for a small portion of a retirees income plan. Although annuities are often complex, these are very simple. In exchange for a lump sum of money the client receives a fixed payment for life. It’s quoted before purchase so the tradeoff is known with no surprises.
These can be useful for providing a certain amount of income that the client can rely on regardless of what happens in the market or how long they might live. These might be good for retirees that have adequate savings in a 401k or IRA, but no pension, or a Social Security benefit that is smaller than they would like.”
Brandon Renfro, CFP®, Ph.D., RICP®, EA | Belonging Wealth Management
“As a fiduciary I have conviction that all our clients should own some form of Identification Insurance/Protection. Many of our clients can afford the financial obligations that happen in a breach. However, the time involved for many busy people would be overwhelming without a third party working on their behalf. The challenge for me, as a fiduciary, is finding a quality product solution and staying on top of the ever evolving features and benefits.”
Darryl Lyons, CFP®, ChFC®, BFA, AIF | PAX Financial Group
Find Fiduciary Financial Advisors on Wealthtender
You’ll find hundreds of fiduciary financial advisors featured on Wealthtender ready to help you develop a personalized plan to achieve your long-term goals.
Credentials and Affiliations That Signal Fiduciary Status
| Credential / Affiliation | Why It Signals Fiduciary Status | Find on Wealthtender |
|---|---|---|
| CFP® (Certified Financial Planner) | ✔CFP professionals must adhere to the CFP Board’s Code of Ethics and Standards of Conduct, which includes a binding fiduciary duty when providing financial advice. They must act with care, skill, and prudence — and always place the client’s interests above their own. | Find a CFP → |
| CFA® (Chartered Financial Analyst) | ✔CFA charterholders agree to the CFA Institute’s Code of Ethics, which requires placing client interests above their own and the firm’s. The CFA designation is one of the most rigorous investment credentials in the industry. | Find a CFA → |
| NAPFA Member | ✔NAPFA (National Association of Personal Financial Advisors) requires all members to be fee-only fiduciaries. They accept no commissions and must comply with a comprehensive, client-centered code of conduct. NAPFA membership is one of the clearest fiduciary signals available. | Find a NAPFA Advisor → |
| XY Planning Network (XYPN) Member | ✔Every XYPN-affiliated advisor takes a fiduciary oath as a condition of membership. XYPN specializes in fee-only financial planners who work with Gen X and Gen Y clients, many of whom offer flexible, subscription-based pricing. | Find an XYPN Advisor → |
| SEC-Registered RIA | ✔Registered Investment Advisers (RIAs) registered with the SEC are held to a fiduciary standard by regulation — not just by a voluntary code. Their Form ADV, publicly available via the SEC IAPD, discloses business practices, conflicts of interest, and background. | Browse Advisors → |
Are You Ready to Hire a Financial Advisor?
You’ll find a growing number of financial advisors featured on Wealthtender. You can search based on the areas of specialization most important to you and where they’re located, or browse our financial advisor directory for more search options to find advisors who may be a good fit for you.
As you consider hiring a financial advisor, we’ll offer one more due diligence tip: review an advisor’s Form ADV via the SEC Investment Adviser Public Disclosure IAPD website. A Registered Investment Advisor (RIA) must register with the SEC. That relationship requires upholding a fiduciary duty to clients. An added step, though, is to dig into the RIA’s form ADV. The ADV form simply discloses business practices, conflicts of interest, and the background of the advisory firm and its employees who give advice.
Find Fiduciary Financial Advisors on Wealthtender
📍 Click on a pin in the map view below for a preview of financial advisors who can help you reach your money goals with a personalized plan. Or choose the grid view to search our directory of financial advisors with additional filtering options, including the ability to narrow your search to fiduciary financial advisors based on credentials held by advisors like the Certified Financial Planner and Chartered Financial Analyst designations.
📍Double-click or pinch pins to view more.
How Much Should It Cost to Work With a Fiduciary?
The good news is that the cost of hiring a fiduciary advisor may not be any more expensive than hiring a non-fiduciary. Often, fiduciaries work on a fee-only basis, which often means an annual planning charge of a few thousand dollars per year. Many advisors’ fee structure is based on “assets under management” whereby you pay a percentage of your portfolio to the advisor each year. In general, you should pay no more than 1% per year.
Should You Hire a Fiduciary Financial Advisor?
A fiduciary advisor is required to act solely in their clients’ best interests. They agree to put the client’s financial circumstances above their own. With so many opaque investment products available these days, working with a fiduciary is more important than ever.
Frequently Asked Questions About Fiduciary Financial Advisors
Are All Fiduciary Financial Advisors “Fee Only”?
Not all fiduciary financial advisors hold themselves out to be “fee only” financial advisors. While a fiduciary financial advisor does not need to be “fee only”, many advisors choose to exclusively earn income from fees, and not commissions, based on a belief that the “fee only” method of compensation is the most transparent and objective method available.
NAPFA, an organization of financial advisors that requires its members only work with a “fee only” structure states it this way:
NAPFA’s position is that the Fee-Only method of compensation is the most transparent and objective method available. This model minimizes conflicts and ensures that your financial planner acts as a fiduciary. Fee-Only planners are compensated directly by their clients for advice, plan implementation and for the ongoing management of assets. All NAPFA members are required to work only within the Fee-Only structure, accepting no commissions for their work.
Fee-Only financial advisors may be paid hourly, as a retainer, as a percentage of assets (AUM), or as a flat fee, depending upon the planner you choose.
Is Edward Jones a Fiduciary?
Edward Jones offers a diverse mix of financial products and services to its clients, at times acting in a fiduciary capacity. You can visit the Edward Jones website to learn how their financial advisors are compensated and the types of fees and commissions you may incur for each of the products and services they offer. You should also ask your Edward Jones financial advisor how they will be compensated for any products and services.
Read this article to learn more: Is Edward Jones a Fiduciary?
Here are links to a few resources available from Edward Jones with more information about the types of fees and commissions you may pay depending upon the type(s) of accounts you open with them:
- Understanding How We Are Compensated for Financial Services – PDF format (published by Edward Jones)
- Material Facts Regarding Conflicts of Interest – PDF format (published by Edward Jones)
- Understanding Our Brokerage and Investment Advisory Services – PDF format (published by Edward Jones)
- Edward Jones Relationship Summary – PDF Format (published by Edward Jones)
About the Author
Mike Zaccardi, CFA®
Mike is a freelance writer for financial advisors and investment firms. He’s a CFA® charterholder and Chartered Market Technician®, and has passed the coursework for the Certified Financial Planner program.
Learn More About Mike