# Conflict of interest

> A conflict of interest is anything about how an advisor is paid or runs their business that could give them a reason to recommend something other than what's best for you.

Canonical page: https://find.wellspent.co/glossary/conflict-of-interest/
Also called: advisor conflicts

Every way of paying for advice has some. The SEC's own examples: with an asset-based fee, the more you have in your account the more you pay, so the firm has a reason to encourage you to add to it; with commissions, the firm earns more when you trade more. Fee-only advisors avoid the conflicts that come from selling products, but not every conflict.

Every adviser's Form CRS has to say, in these words: "When we act as your investment adviser, we have to act in your best interest and not put our interest ahead of yours. At the same time, the way we make money creates some conflicts with your interests." It must then describe conflicts such as proprietary products, third-party payments, revenue sharing and principal trading.

A fiduciary duty doesn't ban conflicts. It requires full and fair disclosure so you can decide with the facts in hand, which is why reading the disclosures is worth the time.

## How to check

Read the conflicts section of the firm's Form CRS and Items 10 through 14 of its Form ADV Part 2A. Then ask the SEC's suggested question: "How might your conflicts of interest affect me, and how will you address them?"

## Sources

- [SEC, Form CRS instructions, Items 3.A, 3.B and the required standard of conduct statement](https://www.sec.gov/files/formcrs.pdf)
- [Investor.gov (SEC), Relationship Summary (checked October 31, 2026)](https://www.investor.gov/introduction-investing/investing-basics/glossary/relationship-summary)
- [SEC, Form ADV Part 2 instructions (SEC 1707, 08-22)](https://www.sec.gov/about/forms/formadv-part2.pdf)

## Related terms

- [Fiduciary](https://find.wellspent.co/glossary/fiduciary.md)
- [Fee-only financial advisor](https://find.wellspent.co/glossary/fee-only.md)
- [Revenue sharing](https://find.wellspent.co/glossary/revenue-sharing.md)
- [Soft dollars](https://find.wellspent.co/glossary/soft-dollars.md)
- [Form ADV](https://find.wellspent.co/glossary/form-adv.md)