Trusting your financial team can be one of the most critical components to a strong partnership, and we firmly believe that being a fiduciary is key.
The most direct way to determine whether your financial professional is acting as a fiduciary is to ask: “When providing advice to me, are you acting as a fiduciary, and does that obligation apply throughout our advisory relationship?”
Then verify the answer.
Review the professional’s registration, Form ADV, Form CRS, written advisory agreement, compensation structure, and disclosed conflicts of interest. You can also research the individual or firm through the SEC’s Investment Adviser Public Disclosure database or FINRA’s BrokerCheck.
The distinction matters because the term “financial professional” can describe people working under different regulatory structures. Some professionals may also serve in more than one capacity. Understanding which standard applies, when it applies, and how the professional is compensated can help you evaluate the relationship more clearly.
What Does It Mean to Be a Fiduciary?
A fiduciary obligation generally requires an investment adviser to act in the client’s best interest within the scope of the advisory relationship.
The SEC describes an investment adviser’s fiduciary duty as including both a duty of care and a duty of loyalty. The adviser must serve the client’s best interest and must not subordinate the client’s interests to its own. The scope of that duty can depend on the nature of the advisory relationship and the services the adviser has agreed to provide.
In practical terms, fiduciary responsibility generally involves:
- Developing advice based on a reasonable understanding of the client’s circumstances and objectives.
- Exercising care in providing investment advice.
- Identifying relevant conflicts of interest.
- Eliminating conflicts or providing appropriate disclosure so the client can provide informed consent, as applicable.
- Providing advice that is in the client’s best interest within the advisory relationship.
Importantly, fiduciary does not mean conflict-free.
Financial firms can have conflicts arising from compensation arrangements, business relationships, investment practices, or other incentives. What matters is understanding those conflicts and how they are addressed.
At Altus Wealth Management, our approach to fiduciary financial advice begins with the belief that clients should understand both the advice they receive and the structure of the relationship in which that advice is provided.
Ask More Than “Are You a Fiduciary?”
Asking whether someone is a fiduciary is an important first step, but a simple “yes” may not give you enough information.
A more useful conversation includes several questions.
1. When Are You Acting as a Fiduciary for Me?
A great way to ask your financial professional about this is:
“Are you acting as a fiduciary whenever you provide advisory services to me, and are there situations in which you may act in another capacity?”
This question is particularly important if the professional or firm has multiple registrations.
A person may, for example, be associated with both an investment adviser and a broker-dealer. The obligations applying to a particular interaction may depend on the capacity in which the individual is acting and the service being provided.
Rather than assuming one title answers the question, ask the professional to explain the relationship in plain language.
2. Will You Put the Relationship in Writing?
Ask to review the documents governing your relationship before making a decision.
Depending on the firm and services involved, those materials may include:
- An advisory agreement.
- Form ADV.
- Form CRS.
- Fee schedules.
- Conflict disclosures.
- Other account or service agreements.
Written documents can help you compare what you were told in conversation with the actual terms of the relationship.
3. How Are You Compensated?
Compensation is one of the most important areas to understand when evaluating a financial professional.
Another great question to ask would be:
“How are you, your firm, and any related parties compensated as a result of our relationship?”
Potential compensation arrangements can include asset-based advisory fees, flat or hourly fees, commissions, referral arrangements, or other payments depending on the professional and services involved.
A particular compensation method does not, by itself, tell you whether advice is appropriate. It can, however, create incentives or conflicts that deserve to be understood.
Your financial professional should be able to explain what you pay, who receives that compensation, and any material conflicts associated with the arrangement.
Review Form ADV
For an investment adviser, Form ADV is one of the most useful documents available to a prospective client.
Investment advisers use Form ADV to provide regulatory information about the firm and its business. Through the SEC’s IAPD system, investors can review information that may include the adviser’s services, fee arrangements, business practices, conflicts, registrations, and certain disciplinary disclosures.
Form ADV Part 2, commonly referred to as the adviser’s brochure, can be particularly helpful when evaluating a potential relationship.
When reviewing it, consider questions such as:
- What services does the firm provide?
- How does the firm charge for those services?
- What conflicts of interest are disclosed?
- What investment practices does the firm describe?
- Are there disciplinary disclosures you should understand?
- Does the information align with what the adviser has told you?
You do not need to become a securities-law expert. The objective is to understand the structure of the relationship before entrusting someone with important financial decisions.
Read Form CRS
Form CRS, or the Customer Relationship Summary, is another useful document for retail investors.
The SEC introduced Form CRS to provide concise information about a financial firm’s relationships and services, including fees, costs, conflicts, and disciplinary history. It is intended to make it easier for investors to understand and compare brokerage and investment-advisory relationships.
Form CRS can help you answer questions such as:
- Is the firm providing brokerage services, advisory services, or both?
- What fees and costs may apply?
- What conflicts of interest are identified?
- What disciplinary information is disclosed?
- Where can you find additional information about the firm?
If a professional describes the relationship one way but the disclosure documents suggest something more complicated, ask for clarification before proceeding.
Verify the Professional Independently
You do not have to rely exclusively on information provided by the financial professional.
Investor.gov provides a search tool that can help consumers research investment professionals and determine whether an individual or firm is registered with the SEC, a state securities regulator, FINRA, or some combination of those entities. It may also provide access to certain disciplinary history and registration information.
Two important resources are:
Investment Adviser Public Disclosure (IAPD): Designed primarily for researching registered investment advisers and investment adviser representatives.
FINRA BrokerCheck: Designed to help consumers research brokers, brokerage firms, registrations, employment history, and certain regulatory or disciplinary disclosures.
Checking registration does not determine whether a financial professional is the appropriate fit for your situation. It does give you an independent source of information to evaluate.
Understand Fiduciary Duty vs. Regulation Best Interest
One of the most important compliance distinctions involves the obligations of investment advisers and broker-dealers.
Investment Advisers
Under federal law, an investment adviser owes a fiduciary duty to its advisory clients. The SEC describes that fiduciary duty as applying to the advisory relationship and encompassing duties of care and loyalty.
Broker-Dealers
Broker-dealers making covered recommendations to retail customers are subject to Regulation Best Interest, commonly called Reg BI.
Reg BI requires a broker-dealer to act in the retail customer’s best interest when making a recommendation of a securities transaction or investment strategy involving securities and not place the broker-dealer’s interests ahead of the customer’s interests. The framework includes disclosure, care, conflict-of-interest, and compliance obligations.
These are both meaningful investor-protection standards, but they do not operate identically.
That is why we believe a better question than simply asking, “Do you have to act in my best interest?” is:
“What regulatory or professional standard applies to the services you are providing to me, and when does that standard apply?”
The answer can give you a clearer understanding of the relationship.
Does a Certified Financial Planner™ Professional Have a Fiduciary Duty?
CFP Board requires a CFP® professional to act as a fiduciary when providing financial advice to a client.
Under CFP Board’s Code of Ethics and Standards of Conduct, that fiduciary duty includes a duty of loyalty, a duty of care, and a duty to follow client instructions. CFP Board also requires material conflicts of interest to be appropriately addressed under its standards.
The credential is therefore an important consideration, but it should not replace your broader due diligence.
You should still understand:
- The firm the professional represents.
- How the professional and firm are registered.
- What services are being provided.
- How compensation works.
- What conflicts may exist.
- What agreements govern your relationship.
At Altus, our team structure includes Certified Financial Planner™ professionals, and we believe professional credentials are most meaningful when combined with clear communication, thoughtful planning, and a well-defined client relationship.
Fiduciary Status Does Not Answer Every Question
Knowing whether someone acts as a fiduciary is important, but fiduciary status alone does not determine whether that professional is the appropriate fit for you.
You may also want to evaluate the professional’s:
Planning Process
Does the relationship begin with understanding your financial situation, goals, concerns, obligations, and priorities?
At Altus, we believe financial planning should provide the framework for evaluating financial decisions rather than treating each investment, retirement, or cash-flow decision in isolation.
Investment Philosophy
Can the professional clearly explain how investment decisions are made, what risks are involved, what costs may apply, and how the portfolio relates to your objectives?
All investments involve risk, including the potential loss of principal. The appropriate investments, costs, liquidity characteristics, tax treatment, and risks can vary significantly based on an investor’s circumstances.
Our investment management approach is intended to connect portfolio decisions with the broader financial plan rather than evaluating investments without context.
Approach to Conflicts
Ask the professional to identify material conflicts and explain how the firm addresses them.
A fiduciary relationship should not be described as one in which conflicts cannot exist. The better question is whether the conflicts have been appropriately identified, disclosed, mitigated, or eliminated, depending on the circumstances.
Ongoing Review
Financial circumstances change.
Retirement may approach. Income may change. A business may be sold. Family responsibilities may evolve. Markets and tax laws can change.
We believe a wealth management relationship should create a framework for periodically reviewing whether a strategy remains aligned with the client’s circumstances and objectives.
Questions to Ask a Potential Fiduciary Financial Advisor
Before entering an advisory relationship, consider asking:
- When are you required to act as a fiduciary for me?
- Are there circumstances when you act in a different capacity?
- How are you and your firm compensated?
- What material conflicts of interest should I understand?
- How are those conflicts addressed?
- Are you registered as an investment adviser, broker, or both?
- May I review your Form ADV and Form CRS?
- What services are included in our advisory relationship?
- How will you learn about my goals, financial circumstances, and risk tolerance?
- How frequently will we revisit my financial plan?
- How do investment recommendations connect to my broader financial strategy?
- What professional credentials do you hold, and where can I independently verify them?
These questions are not designed to lead you toward one particular type of professional. They are intended to give you more information with which to make an informed decision.
How Altus Approaches Fiduciary Wealth Management
At Altus Wealth Management, we serve as a fiduciary when providing advisory services to our clients.
We believe fiduciary responsibility should be understood as part of a broader relationship built around careful planning, clear communication, and an understanding of each client’s circumstances.
It does not mean investment risk disappears. It does not mean conflicts can never exist. It does not guarantee a particular financial outcome.
Instead, the fiduciary standard establishes important obligations regarding how advisory services are provided and how client interests are treated within the advisory relationship.
Our approach is to bring financial planning and investment management together so financial decisions can be considered within a broader framework of goals, priorities, risk, and life circumstances.
Frequently Asked Questions About Fiduciary Financial Professionals
How do I know if my financial advisor is a fiduciary?
Ask the professional when they are required to act as a fiduciary, review the written advisory agreement and regulatory disclosures, and independently verify the individual or firm through Investor.gov, IAPD, or FINRA BrokerCheck. Registration and disclosure documents can help clarify the capacity in which the professional is providing services.
Is every financial advisor a fiduciary?
No. “Financial advisor” or “financial professional” can describe individuals operating under different regulatory structures. Investment advisers owe fiduciary duties to advisory clients, while broker-dealers making covered recommendations to retail customers are subject to Regulation Best Interest. Some professionals may operate in both capacities.
Can a fiduciary have conflicts of interest?
Yes. Fiduciary status does not mean that conflicts of interest cannot exist. Investment advisers have obligations concerning conflicts, which can involve elimination or full and fair disclosure sufficient for informed consent, depending on the circumstances.
What documents should I ask a financial advisor for?
For an investment adviser, Form ADV, Form CRS, the advisory agreement, and applicable fee or conflict disclosures can provide useful information. The documents that apply will depend on the firm and the services being provided.
How can I verify a financial advisor’s registration?
Investor.gov, the SEC’s Investment Adviser Public Disclosure database, and FINRA BrokerCheck provide tools for researching financial professionals, firms, registrations, and certain disclosure information.
Is a Certified Financial Planner™ professional a fiduciary?
CFP Board requires a CFP® professional to act as a fiduciary when providing financial advice to a client. That professional obligation is separate from, and may exist alongside, regulatory obligations applicable to the person or firm.
Is a fiduciary better than a broker?
The more useful question is which relationship structure and services are appropriate for your circumstances. Investment advisers and broker-dealers operate under different regulatory frameworks, and both can provide valuable services. Understanding the services, costs, conflicts, and applicable standard can help you compare your options.
Why does fiduciary responsibility matter?
Fiduciary responsibility establishes important obligations governing how investment advisers serve advisory clients. Understanding those obligations can help you evaluate how advice is developed, how conflicts are addressed, and how the professional relationship is structured.
Gain Clarity About the Relationship Before You Hire
Choosing someone to help guide important financial decisions warrants careful evaluation.
Fiduciary status is an important consideration, but we believe the larger objective is understanding the complete advisory relationship: what services are being offered, which standard applies, how the firm is compensated, what conflicts exist, how those conflicts are addressed, and how recommendations will be connected to your circumstances.
If you are looking for clarity about your options, start a conversation with Altus Wealth Management.
A structured conversation can help you better understand the type of financial relationship that may fit your goals, circumstances, and long-term planning needs.
Disclosure
This material presented by Altus Wealth Management (“Altus”) is for informational purposes only and is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy, or investment product. Facts presented have been obtained from sources believed to be reliable, however Altus cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. Altus does not provide legal or tax advice, and nothing contained in these materials should be taken as legal or tax advice. Advisory services are only offered to clients or prospective clients where Altus and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Altus Wealth Management unless a client service agreement is in place.