It depends on which role your advisor is playing, and many play two: about half of US brokers (319,597 of the 628,392 registered with FINRA at the end of 2023) were also registered as investment adviser representatives. An investment adviser owes you a fiduciary duty for the whole relationship. A broker owes you a best-interest duty only at the moment they recommend something. A dual-registered advisor can switch between the two from one account to the next.
And even a true fiduciary can be paid in ways that pull against you. That’s why the better question is how your advisor is paid.
Two standards, one phrase
Investment advisers are fiduciaries under federal law. The SEC describes the duty as a duty of care and a duty of loyalty that “applies to the entire relationship between the adviser and its client.” In plain terms: the advice has to suit you, the adviser can’t put their interest ahead of yours, and where they agreed to watch your account, they have to keep watching it. The duty can’t be waived in a contract.
Brokers follow Regulation Best Interest, in force since June 30, 2020. A broker must “act in the best interest of the retail customer at the time the recommendation is made.” It’s a real standard, but a narrower one. It applies when a recommendation is made, and the SEC says plainly that it “does not impose a duty to monitor a retail customer’s account.”
Here’s the catch. Both standards use nearly the same words in the two-page summary every firm gives you, Form CRS. An adviser’s says “we have to act in your best interest and not put our interest ahead of yours.” A broker’s says the same thing, starting “When we provide you with a recommendation.” The words sound identical; the duties aren’t.
| Investment adviser | Broker | |
|---|---|---|
| Rule | Investment Advisers Act fiduciary duty | Regulation Best Interest |
| When it applies | The whole relationship | When a recommendation is made |
| Watching your account | If agreed, part of the duty | Not required unless agreed |
| How they’re often paid | Fees you pay | Commissions on products |
| Where to look them up | adviserinfo.sec.gov | BrokerCheck |
Dual registrants: the advisor with two hats
Registered representatives who are dual registered, year-end 2023
Source: FINRA 2024 Industry Snapshot
A dual-registered advisor works as an investment adviser on some accounts and as a broker on others. On the advisory account they’re a fiduciary. On the brokerage account, or when selling an annuity or insurance through a related company, they’re held to the sales standard, and they can earn a commission.
Neither role is a scandal. The problem is not knowing which one you’re dealing with. Ask for each account: “Are you acting as my investment adviser or my broker here?” Dual registrants can combine both roles in one Form CRS of up to four pages instead of two, which is a quick sign you’re looking at one.
Why fiduciary isn’t enough on its own
The fiduciary duty doesn’t ban conflicts of interest. The SEC’s own wording is that an adviser must “eliminate or at least expose through full and fair disclosure” the conflicts that could sway their advice. Disclosed and consented to, many conflicts are allowed.
So a fiduciary can still:
- Earn commissions on insurance or annuities as a dual registrant
- Work for a firm with a related broker-dealer or insurance agency
- Recommend funds that pay the firm
- Charge a percentage of assets, which pays more if you keep money invested rather than pay off a mortgage
This is where fee-only comes in. A fee-only advisor is paid only by you, so the commission conflicts are gone, not just disclosed. Fee-only advisors are fiduciaries too, so you get both. Our comparison of fee-only, fee-based and commission advisors lays out the differences.
You’ll also hear “I’m a CFP, so I’m a fiduciary.” That’s true as far as it goes: since October 1, 2019, the CFP Board has required certified planners to act as fiduciaries whenever they give financial advice. It’s a professional standard the CFP Board enforces, not a law, and it doesn’t stop a CFP professional from earning commissions.
How to check in ten minutes
- Find the firm on the SEC’s free adviser search. Choose “Firm,” search the name and open the summary.
- Read the Form CRS. Look for the heading “What are your legal obligations to me.” An adviser’s version says “when acting as my investment adviser”; a broker’s says “when providing recommendations.” A dual registrant covers both.
- Check the person. Search the advisor by name on the same site or on FINRA BrokerCheck. A current broker registration alongside an adviser registration means two hats.
- Open Form ADV Part 1. Item 5E shows whether the firm earns commissions. Items 6A and 7A show insurance sales and related brokerage firms. Our guide to telling whether an advisor is fee-only walks through each one.
- Ask for it in writing. “Will you act as a fiduciary at all times, on every account and every recommendation, including insurance?” A clear yes in writing is worth more than one in a meeting.
In Canada
Canada doesn’t use “fiduciary” as the general rule for advisors. Since the Client Focused Reforms came into force in 2021 (conflict rules on June 30, the rest on December 31), registered dealers and advisers must address material conflicts “in the best interest of the client” and put the client’s interest first when deciding whether an investment is suitable. A statutory fiduciary duty applies in some provinces when an advisor has discretion, meaning they can trade your account without asking you first.
To check an advisor, search their name in the Canadian Securities Administrators’ National Registration Search, which shows their registration category. Planners who don’t sell investments or recommend specific ones may not be registered, so also check their title: Ontario has regulated who can call themselves a “financial planner” or “financial advisor” since 2022, and Quebec requires a certificate from the AMF to use the financial planner title. Our guide to advice-only planning covers that side.
Questions to ask your advisor
- Are you a fiduciary on every account you manage or advise on for me?
- Are you registered as a broker as well as an adviser?
- Do you or your firm earn anything other than what I pay you directly?
- Do you sell insurance or annuities, or does a company you’re connected to?
- What do I pay in total each year, in dollars?
A fee-only fiduciary answers yes to the first, no to the next three, and gives you a number for the last. See how much a financial advisor costs to judge whether that number is fair.