The short answer
A fiduciary is a professional with a legal duty to act in a client’s interest, ahead of their own. Registered investment advisers are generally held to this standard. It is a duty of conduct, and it does not by itself tell you how the advisor is paid or what the advice will be.
What fiduciary means
Fiduciary duty has two core parts. A duty of care means giving advice that is suited to the client’s goals and situation. A duty of loyalty means not putting the advisor’s interests ahead of the client’s, and disclosing conflicts of interest that exist.
Registered investment advisers owe this duty under federal law. CFP® professionals also commit to a fiduciary standard when giving financial advice, under the CFP Board’s Code of Ethics and Standards of Conduct.
Who may not be held to it
Not everyone who gives financial guidance is a fiduciary for every service. Some professionals, such as brokers who sell investment products, are generally subject to a different conduct standard set by securities regulators. Some people wear both hats, acting as a fiduciary for some services and under the other standard for others.
That is why it helps to ask: “Are you a fiduciary at all times, for all of the advice you give me?”
What fiduciary does not mean
- It does not mean conflict-free. Every pay model carries some conflicts. A fiduciary is expected to disclose and manage them.
- It does not guarantee results. Investing involves risk, including the potential loss of principal.
- It is not the same as fee-only. Fee-only describes pay. Fiduciary describes duty. Read more in our fee-only vs fee-based guide.
How to verify an advisor
- Search the firm at adviserinfo.sec.gov. Registered advisers file a Form ADV that describes services, fees, conflicts, and any disciplinary history.
- Check CFP® status and any public disciplinary record through the CFP Board’s lookup tool.
- Ask for the fiduciary commitment in writing, in your advisory agreement.
- Ask how the advisor handles conflicts, and listen for a specific answer.
How N Financial Plans approaches it
N Financial Plans is a fee-only, fiduciary firm. We accept zero commissions and sell no products. Our founder holds the CFP®, IRS Enrolled Agent (EA), and CRPS™ designations. We serve clients on Long Island and nationwide. See how we work in Huntington or learn about comprehensive financial planning.
