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Fiduciary vs financial advisor

Financial advisor is a job title, not a license. Investment advisers owe a fiduciary duty. Brokers follow Regulation Best Interest. Check the account.

The short answer

"Financial advisor" is a job title. It is not a license you can look up.

If the firm gives investment advice and files Form ADV, it has a fiduciary duty to those clients. In plain words, it has to be careful and put the client first. A broker who recommends a stock or fund to a regular customer follows a different rule, called Regulation Best Interest. That rule covers the recommendation. It is not the same duty.

One person can do both jobs. The account you open is what picks the rule.

Advisory accountBrokerage account
Where you look it upForm ADV on IAPDBrokerCheck
The ruleFiduciary duty to youRegulation Best Interest on a recommendation
Paper to keepThe advisory agreement, the brochure, Form CRSThe brokerage agreement, Form CRS
What a homepage badge provesNothing, until the agreement says itNothing, until the agreement says it

What to do

  1. Open Search and open the firm page, not only the person's page.
  2. Copy the firm's CRD. That is its ID number. Open the same firm on IAPD if you want the government copy of Form ADV. If our page and IAPD disagree, use IAPD. See Best Investors vs SEC IAPD.
  3. Open BrokerCheck for the person you will meet. A record there means they have a broker license. It does not cancel an advice relationship. It means you should ask which account this advice is for.
  4. On the firm's ADV panel, read Item 6A and Item 5B(2). Item 6A asks about other businesses, including a broker-dealer. Item 5B(2) counts employees who are also brokers. A Yes, or a headcount above zero, means a second license may sit next to the advice.
  5. Read Form CRS, the short relationship summary, from the firm or from IAPD. It says whether the firm is a broker, an adviser, or both.
  6. Email this and keep the reply with the draft agreement: "Will you act as a fiduciary for all advice you give me on this account? Please say so in the agreement. If any account will be a brokerage account instead, name it." More questions are in questions before hiring.

What to look for on Best Investors

  • The firm page, not the slogan. The ADV panel describes the advice firm. It does not grade the word "fiduciary" on a marketing page.
  • Item 6A and Item 5B(2). These show broker-dealer activity and employees who can sell securities. Read them next to Item 5E, which is how the firm gets paid.
  • Form CRS and the brochure. Those are better than a badge at the top of the profile.
  • Claim badge. Someone claimed the listing. They did not pass a fiduciary test by doing that.
  • Item 11. This is disclosure history, such as a past legal or regulatory problem. A blank Item 11 does not prove the duty. See how to read Item 11.

Common mistakes

  • Treating "financial advisor," "wealth manager," and "fiduciary" as three licenses. The first two are titles. The third is a duty that comes with a relationship.
  • Stopping after a phone call where they say "yes, I'm a fiduciary." The agreement is the copy you can keep.
  • Checking IAPD and skipping BrokerCheck, or the other way around. You only see both licenses if you open both sites.
  • Assuming the letters CFP replace the registration check. The letters and the license are different facts. See CFP vs CFA.
  • Reading a large AUM number as proof of the duty. AUM is assets under management, a size figure the firm reported. It is not a duty.

Related questions

If they say they are a fiduciary, am I done?

No. Ask which account the duty covers. You can have an advice account and a brokerage IRA at a related firm at the same time. Get the sentence in the agreement for the account you will fund. A line on the homepage is not that sentence.

Is a CFP the same thing as a fiduciary?

No. CFP Board tells CFP professionals to act as fiduciaries when they give financial advice. That is the group's own rule. The government license is still Form ADV, a broker license, or both. Check the registration even when the letters are real.

What should I email before I sign?

Send: "Will you act as a fiduciary for all advice you give me on this account? If any account will be a brokerage account, name it. Please confirm this in the agreement." Keep the reply next to Form CRS.

Do I look up the person or the firm?

Look up both. IAPD and the firm page here cover the advice firm. BrokerCheck covers that person's broker record. RIA vs broker shows which file matches which job.

Limits

Best Investors is not a regulator, and this page is not legal advice. We do not decide whether a past recommendation met the legal duty. Regulators and courts do that.

The firm filled out Form ADV. We do not audit assets, fee claims, or Item 11 stories. "Financial advisor" is not a box on the form, and fiduciary duty is not a Yes or No on Part 1A.

Your check is the registration, Form CRS, and the agreement. If a filing here disagrees with IAPD, use IAPD.

Sources

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