Fiduciary
An advisor legally bound to act in your interest, which is a higher standard than the alternative.
Fiduciary duty obliges an advisor to place your interests ahead of their own and to disclose conflicts of interest. Registered investment advisers are held to it by law. It is a legal standard rather than a credential or a claim.
Broker-dealers operate under Regulation Best Interest, which requires recommendations to be in the customer's best interest but permits commission-based compensation and does not carry the same ongoing duty. Two comparable products with different fee structures can both satisfy that standard.
The compensation labels are distinct in a way the words hide. Fee-only means the advisor is paid solely by the client. Fee-based means fees plus commissions from product sales. The two terms are one syllable apart and describe materially different arrangements, and an advisor can state which applies to them.
Worked through
Registered investment adviser
- Held to fiduciary duty by law
- Fee-only advisers take no commissions
- Conflicts must be disclosed
- Files a public Form ADV
Compensation comes from the client
Broker-dealer
- Held to Regulation Best Interest
- May be paid by commission
- Duty attaches to the recommendation
- Records held on BrokerCheck
Compensation may come from product providers
See your own fiduciary
Promi computes this from your linked accounts, with the definition one click from the number.
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