By Gregg Gonzalez, CFP®
When choosing a financial advisor, one of the most important and often misunderstood terms you’ll come across is “fiduciary.” But what exactly does it mean to be a fiduciary, and why should it matter to you as a client?
Let’s break it down.
Defining the Fiduciary Standard
A fiduciary is legally and ethically obligated to act in another person’s best interest. In the financial world, this means a fiduciary advisor must always prioritize your financial well-being above their own compensation, business goals, or outside influences.
They don’t just recommend what’s suitable, they are bound to recommend what is best for you based on your goals, risk tolerance, and financial situation.
Fiduciary vs. Suitability Standard
Many people are surprised to learn that not all financial professionals are held to a fiduciary standard. Some operate under what’s known as the suitability standard, which only requires that a product or investment be “suitable” for a client not necessarily the most cost-effective, tax-efficient, or strategically aligned with long-term goals.
For example, both a low-cost index fund and a high-fee annuity might be “suitable” for retirement planning, but only one may truly be in your best interest. A fiduciary would be obligated to choose the option that benefits you the most, not them.
What Fiduciary Duty Looks Like in Practice
A fiduciary advisor:
- Provides transparent recommendations with no hidden agendas
- Discloses all fees, conflicts of interest, and compensation
- Takes a holistic view of your financial life, not just product sales
- Customizes advice to align with your unique goals and values
- Maintains an ongoing responsibility to monitor and adjust your financial plan
This level of accountability builds trust, and trust is the foundation of every meaningful client-advisor relationship.
Why It Matters to You
Working with a fiduciary means confidence. It means knowing your advisor is committed to your financial success, not just earning a commission. It also means having an advocate who will:
- Help you navigate complex financial decisions
- Guide you through life transitions (retirement, inheritance, caregiving, etc.)
- Stay aligned with your long-term vision
In an industry filled with jargon, products, and pitches, fiduciary advisors bring clarity and care.
How to Know If Your Advisor Is a Fiduciary
Ask these questions:
- Are always you a fiduciary when working with me?
- How are you compensated?
- Are you legally obligated to put my interest first?
Look for certifications like CFP® (Certified Financial Planner), which often carry fiduciary obligations, and ask for transparency in both philosophy and practice.
Final Thoughts
At its core, being a fiduciary is about building a relationship based on trust, integrity, and accountability. Whether you’re saving for retirement, managing an inheritance, or creating a legacy for future generations, a fiduciary advisor ensures you never have to second-guess whose side they’re on.
Because when it comes to your financial future, you deserve someone who puts you first—always.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and there is no guarantee of future results. All indices are unmanaged and may not be invested directly.
All investing involves risk including loss of principal. No strategy assures success or protects against loss.
