Is my financial advisor a fiduciary? How to check in 5 minutes
TL;DR. To check whether your current financial advisor is a fiduciary, do three things: (1) look them up on the SEC's Investment Adviser Public Disclosure database; (2) read Item 5 of their firm's Form ADV Part 2A to see how they're paid; and (3) ask them, in writing, whether they act as a fiduciary on every recommendation at all times. If any of those three comes back ambiguous, they are probably not acting as a fiduciary on everything they advise on.
What "fiduciary" actually means
A fiduciary is legally required to act in your best interest — not their own, not their firm's, and not the product companies paying them. The Investment Advisers Act of 1940 created this duty for registered Investment Advisers, and the Supreme Court confirmed it applies to every recommendation, not just some of them (SEC v. Capital Gains Research Bureau, 375 U.S. 180 (1963)).
The duty has two parts:
- Loyalty — put the client's interests above the adviser's own and disclose every material conflict.
- Care — act with the skill and diligence a reasonable professional would.
A fiduciary who recommends a product because it pays them more than an equivalent product has breached the duty of loyalty — whether or not the client was harmed.
A broker-dealer representative, by contrast, owes a different duty under Regulation Best Interest (Reg BI). Reg BI requires a recommendation to be "in the retail customer's best interest" at the time it is made, but it does not require the recommendation to be the best available option. That gap — between "in your best interest" and "the best for you" — is where commissions, kickbacks, and revenue-sharing arrangements live.
Why you probably can't tell from the title
A person can legally introduce themselves as a "financial advisor," "wealth manager," "financial planner," or "wealth consultant" regardless of how they're registered or paid. None of those titles are regulated. What matters is what's on their registration record — and that record is public.
There are three possible registrations your advisor holds:
- Investment Adviser Representative (registered with the SEC or your state) — fiduciary duty applies.
- Broker-dealer representative (registered with FINRA) — Reg BI applies; full fiduciary duty does not.
- Dual-registered (both of the above) — fiduciary duty applies only when the advisor is "providing investment advice"; when they are "effecting trades" or "selling products," the broker standard applies. The line between the two is famously blurry.
If your advisor is in bucket two or three, they are not a fiduciary on everything they do for you.
The 5-minute check, step by step
Step 1: Find their CRD or IARD number
Ask your advisor for their CRD number, or find it on their firm's website (it's often in the footer or on the "about" page). Every registered adviser and broker has one. If they don't have one, they aren't registered — and you have a problem.
Step 2: Look them up on IAPD
Go to adviserinfo.sec.gov. Enter the name, firm, or CRD number. The top result is usually the right person.
The report will tell you three things at a glance:
- Whether they are registered as an Investment Adviser, a Broker, or both.
- The firms they're registered with.
- The number of disclosures on their record (regulatory actions, customer complaints, arbitration awards, felony convictions related to finance).
If IAPD returns no results, try FINRA BrokerCheck. An advisor who appears only on BrokerCheck is registered as a broker, not as an Investment Adviser — they are not a fiduciary on their securities recommendations.
Step 3: Open Form ADV Part 2A
From the IAPD report, click through to the advisor's firm. At the top of the firm page you'll see a "Form ADV" link. Part 2A — the "firm brochure" — is the document you care about. By SEC rule, every registered Investment Adviser must provide this document to every client before engagement and update it at least annually (17 CFR §275.204-3).
Open the brochure and scroll to Item 5 (Fees and Compensation).
Step 4: Read how they're paid
Item 5 is the fee disclosure. You are looking for one of these patterns:
- Fee-only — "We are paid solely by our clients. We do not receive commissions, 12b-1 fees, or other compensation from product sponsors." This is the fiduciary gold standard.
- Fee-based — the firm charges fees AND earns commissions on products. Half-fiduciary, half-broker. Not what most people mean when they say "fiduciary."
- Commission-based — the firm earns money when you buy specific products. Reg BI applies, not fiduciary duty.
Also skim Item 10 (Other Financial Industry Activities) and Item 14 (Client Referrals and Other Compensation). If Item 10 mentions that the firm is also a broker-dealer or insurance agency, conflicts exist. If Item 14 mentions that the firm pays referral fees or receives them from third parties, read closely.
Step 5: Ask in writing
Send your advisor one email:
I want to confirm a few things in writing for my records:
- Are you acting as a fiduciary on every recommendation you make to me, at all times, with no exceptions?
- Are you paid only by me, or also by commissions, 12b-1 fees, or any other compensation from product sponsors or affiliated firms?
- Can you send me your current Form ADV Part 2A and Form CRS?
A fiduciary answers "yes," "only by you," and sends the documents without friction. Anything else is the answer.
What the records actually tell you
Here's what common Form ADV patterns look like in plain English:
| Firm type | What you'll see in Item 5 | Fiduciary on everything? |
|---|---|---|
| Fee-only RIA | "We are compensated solely by advisory fees paid by our clients." | Yes |
| Fee-based RIA (hybrid) | "We charge advisory fees and may also earn commissions on certain insurance or securities products." | No — only on the advisory fee side |
| Broker-dealer with advisory arm | "Our representatives are dually registered. As registered representatives of [BD], they may earn commissions on brokerage transactions." | No — depends on the hat worn at the moment |
| Wirehouse / big bank | Long list of compensation sources: advisory fees, commissions, 12b-1s, incentive compensation from proprietary products | No — significant conflicts |
None of these are illegal. The first is the only one that consistently aligns the advisor's pay with your outcomes.
What to do if they're not a fiduciary
You have three options:
- Stay, with eyes open. If the relationship is working and you trust the advisor's character, you can stay. But know that the legal safety net is thinner than you thought, and shop every major recommendation against an independent second opinion.
- Convert to fee-only. Some dual-registered advisors can offer you a "fee-only advisory account" separately from their brokerage relationship. Ask. The catch: you may need to move assets and pay termination fees on existing products.
- Switch. Move to a fee-only fiduciary firm. It is less painful than people think — custodians (Schwab, Fidelity, Altruist) run the transfer, and most fee-only firms will handle the paperwork. A verified directory like Fiduciary Check, NAPFA, or the Garrett Planning Network is the fastest way to shortlist a replacement.
What to do if they ARE a fiduciary but you're still uncertain
Three diagnostics:
- Ask what they recommend against. A real fiduciary can name products and strategies they avoid for conflict reasons — variable annuities with high surrender charges, non-traded REITs, proprietary funds of funds. An advisor who recommends everything and warns against nothing is not exercising the duty of care.
- Ask for a fee audit. A fiduciary will itemize every fee you pay — advisory fee, fund expense ratios, platform fees, trading commissions — and tell you the total as a single number. If the total exceeds 1.5% of assets per year for a standard portfolio, get a second opinion.
- Read last year's Form ADV Part 2A again. It changes. If Item 5 or Item 10 shifted to include new compensation sources, ask why.
Red flags on the regulatory record
- Multiple settled customer complaints. One or two disclosures over a long career may reflect unlucky market timing or disputes unrelated to conduct. A pattern of settled complaints with the same theme (unsuitable recommendations, churning) is a red flag.
- Regulatory actions — SEC, FINRA, or state securities division enforcement. Always worth asking about, even if resolved.
- "No longer registered" status at a prior firm with a concurrent customer complaint. This is the pattern of someone moving before discipline catches up.
- Bankruptcies and liens in the past 10 years. Relevant because a cash-strapped advisor faces pressure that conflicts with client interest.
For a deeper walkthrough of the patterns, see 8 red flags on a financial advisor's record.
Key takeaways
- IAPD (adviserinfo.sec.gov) is the authoritative source. Five minutes, free.
- Item 5 of Form ADV Part 2A tells you how the advisor is paid.
- Fee-only is the fiduciary gold standard. Fee-based and commission-based are not the same thing.
- Ask in writing: "Are you a fiduciary at all times on every recommendation?" A real fiduciary answers yes without qualification.
- Dual-registered advisors wear two hats. Their fiduciary duty applies only when they are advising, not when they are selling.
Sources
- Investment Advisers Act of 1940 §202(a)(11). PDF.
- SEC v. Capital Gains Research Bureau, 375 U.S. 180 (1963).
- SEC Regulation Best Interest. Final rule.
- 17 CFR §275.204-3 — Investment Adviser brochure delivery requirements.
- SEC Investment Adviser Public Disclosure — adviserinfo.sec.gov.
- FINRA BrokerCheck — brokercheck.finra.org.
Not sure about your advisor? Get a second opinion.
Fiduciary Check reviews every advisor in our directory against the fee-only fiduciary standard. You can also use our verification tool to look up any advisor by name or CRD.
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- 8 red flags on a financial advisor's record