What is a Fiduciary Financial Advisor?

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Contributor, Benzinga
July 15, 2021

A fiduciary financial advisor is a financial advisor that must act in the best interest of their customer or client. They are legally required to avoid conflicts of interest and cannot use their customer or client’s assets for their own benefit. Here’s everything you need to know about using a fiduciary financial advisor. 

How to Find a Fiduciary Financial Advisor

Using any of these online tools marks a great starting place for your search:

  • You can check with the U.S. Securities and Exchange Commission (SEC) — all investment advisors who are registered with the SEC must act as fiduciaries. 
  • You can use the online search tool on the National Association of Personal Financial Advisors (NAPFA) website.
  • You can also access the search tool on the Certified Financial Planner Board of Standards, Inc. (CFP® Board) website.

No matter where you find the financial advisor that you are considering working with, it’s always a good idea to do your own due diligence. Securing extra peace of mind means that you should be prepared to ask a number of questions to ensure that the advisor will act in your best interest. 

The first question that you should ask to make sure that you’re working with a fiduciary is how they get paid. If the advisor answers that they work on commission, then they are not a fiduciary. A fiduciary financial advisor will most likely tell you that they are fee-based, and you should expect to pay a fee for their services. 

Of course, you could always be completely upfront and ask the financial advisor if they are a fiduciary. If the advisor tells you that they are a fiduciary, you can confirm their fiduciary status by checking with the SEC’s advisor information database. It’s not a bad idea to ask your financial advisor to confirm that they will be a fiduciary at all times in writing, as well. 

Price for Fiduciary Financial Advisement 

Since fiduciary financial advisors are paid via fees, your next question is probably how much that’s going to cost you. As with most things, the fees that fiduciary financial advisors charge depend on the advisor that you choose, as they can set their own rates. 

If your financial advisor charges a flat fee to create a comprehensive financial plan, you can probably expect to pay anywhere between $1,500 and $3,000 for this service. Some financial advisors charge an hourly rate or may charge a retainer rate. Hourly rates typically are anywhere from $150 to $400 per hour for the advisor’s services. If your fiduciary financial advisor manages your assets for you, they may also charge a percentage of that asset. This fee is usually 1% to 2% of your assets annually. 

Duties of a Fiduciary Financial Advisor

A fiduciary financial advisor must act in your best interest at all times. Fiduciary status means that they should do the following:

  • Seek the best prices, terms and products for clients
  • Provide all relevant facts and information to clients
  • Act in good faith in all their advice to clients
  • Avoid conflicts of interest 
  • Disclose potential conflicts of interest to their clients
  • Provide accurate and thorough advice to the best of their ability
  • Avoid using the client’s assets to benefit themselves

Fiduciaries have a legal responsibility to do these things so that they are acting solely in the client’s best financial interests. A fiduciary may not recommend a product or investment strategy that earns them a commission or other benefit. 

If a fiduciary financial advisor breaches their fiduciary duty, you can take legal action against them. Some examples of a breach of fiduciary duty are if the advisor gives you false information or if they manage your assets in a way that does not have your approval. Basically, if they do anything that is not in your best interests or in good faith, it could be a breach of their fiduciary duty.

Fiduciary Financial Plans

At its core, a fiduciary is someone who manages property or money on someone else’s behalf for the benefit of that person.  A fiduciary financial advisor will create a financial plan for you that puts forth advice benefiting your own best interests. When a fiduciary financial advisor creates your financial plan, they have to carefully consider your financial situation as well as your goals. Based on these factors, they provide advice to help you meet your financial objectives while keeping your total financial picture in mind. You can expect your financial plan from a fiduciary to include the most affordable solutions that will help you reach your financial goals.  

Pros and Cons of a Fiduciary Financial Advisor

Compare the pros and cons of a fiduciary financial advisor.


  • Fiduciary financial advisors act in your best interest, offering advice tailored specifically for you and your financial situation.
  • Since fiduciary financial advisors are paid using a flat fee or other fee-based structure, there’s more transparency when it comes to paying for the services of a financial advisor.
  • Fiduciaries must act in your best interest and be upfront and honest with you, keeping you fully informed about everything they are doing and eliminating possible conflicts of interest.


  • Even though the pricing structure is more transparent, working with a fiduciary financial advisor may be more expensive than working with a non-fiduciary.
  • You may find that your options as far as products and services go are limited.

Fiduciary Financial Advisor vs. Robo-Advisor

When you use a fiduciary financial advisor, you know that a real, live human being is managing your assets and giving you advice. You also know that they are legally bound to act in your best interests. So what happens if you use a robo-advisor instead?

A robo-advisor is a digital platform that uses technology to create automated financial planning services based on algorithms. It’s a popular option and can be a great alternative for some investors. However, there is debate within the financial services industry around whether robo-advisors are fiduciaries.

The main benefits of using a robo-advisor are that it’s fairly simple to open an account and get started and it’s usually more cost-efficient. All you need to do is answer a few questions about your goals and preferences to get your account set up. From there, a robo-advisor can automate investment strategies to create a portfolio for you. As time goes on, the robo-advisor will monitor and rebalance your portfolio based on changes in the market, and you don’t need to do a thing. There’s no need to call to check in with anybody because the robo-advisor is already handling it for you. Robo-advisors typically charge between 0.25% and 0.50% of your assets. 

Fiduciary financial advisors are real, live humans. By working with one, you’ll be able to ask questions and get advice one-on-one from someone who is familiar with your assets and your financial situation. The set-up process is longer with a human fiduciary financial advisor because you’ll most likely actually sit down with them and have a face-to-face or virtual conversation. In that meeting, the advisor will learn about your goals and risk tolerance so they can provide recommendations that they think will fit your needs. 

There is no right or wrong answer when it comes to deciding between a robo-advisor and a fiduciary financial advisor. It all comes down to your preference. If you want to be able to build a relationship with your advisor, you’ll probably want to work in person with a fiduciary financial advisor. But if you’re comfortable having your assets managed based on an algorithm, a robo-advisor with its lower fee structure might be the right move for you.

Best Financial Advisors

Choosing any professional can be a daunting process, and finding a fiduciary financial advisor is no different. You might consider looking into these advisors as your starting point.

Making the Decision

Fiduciary financial advisors are unique because they are legally bound to act in the best interests of their clients. However, not every financial advisor is a fiduciary, so it’s important to confirm that yours is if you want to make sure that your advisor is held to the standards of a fiduciary. If you’re looking for a financial advisor who can get to know you and provide personalized advice, a fiduciary is probably what you’re looking for.

Frequently Asked Questions


Are financial planners worth the money?


Some consumers feel comfortable enough with finances and economics to create a plan to set up long-term financial actions and objectives for themselves. For other people, the process seems overwhelming or too time-consuming. In that case, it could be worth it to pay a person or a robo-advisor to devise a financial plan for you. Choosing between an impersonal algorithm-based plan or a human financial planner comes down to personal preference.


Should your financial planner be a fiduciary?


Your financial planner doesn’t need to be a fiduciary, but it’s often recommended to ensure that your assets are managed with your best interests in mind. The CFP® Board explains that the “fiduciary standard of conduct should put the interests of the client first and should include both a duty of care and a duty of loyalty.” Finding a financial professional who meets both those standards will help you feel confidence in the financial advice you receive.