What Is A Fiduciary? Questions You Need To Ask
When you're choosing a doctor, you're not just looking for a degree on the wall, you want someone with experience, up-to-date knowledge, sound judgment, and above all, integrity. You trust them with your health. And when something feels off, you don't just “wait it out.” You get a second opinion or find someone better.
Now apply that same thinking to your wealth.
Your money may not seem as critical as your health but it funds everything that supports it: your care, your independence, your family’s future. And yet, many people choose a financial advisor based on a referral, a big brand name, or a polished website... without ever asking how they get paid or who they're really working for.
You want more than a license. You want someone who:
Knows what they’re doing and don’t rely on the “old way of doing things” (competence)
Has been around the block (experience)
Acts with integrity and puts your interests first (loyalty)
Follows your wishes carefully (duty to follow instructions)
Is honest and transparent about all recommendations (duty of care)
That’s what a true fiduciary is supposed to be. Unfortunately, the word fiduciary gets thrown around loosely today. Often by people who don’t meet the standard in practice.
Even some advisors with the CFP® designation may not always act as fiduciaries. According to the CFP Board, while CFP® professionals are held to a fiduciary duty when providing financial advice, that doesn’t automatically apply to every action they take or product they sell unless the advice relationship is clearly defined. In fact, many advisors carry dual registrations, allowing them to “switch hats” between fiduciary and commission-based roles.
This article will answer the question: What is a fiduciary? More importantly, it will help you ask the right follow-up questions so you don’t end up working with someone who says they’re looking out for you but is really looking out for themselves.
What Is a Fiduciary?
A fiduciary is someone who is legally and ethically obligated to act in your best interest at all times, with every recommendation they make.
In simple terms: a fiduciary puts your needs ahead of their own.
This isn’t just a marketing phrase. It’s a specific legal and professional duty. Fiduciaries must avoid conflicts of interest, disclose all relevant information, and only offer advice or products that serve your goals, not theirs.
According to the CFP Board, a fiduciary has three core responsibilities:
Duty of Loyalty
They must put your interests first. That means no undisclosed kickbacks, no steering you toward high-fee products because they pay better, and no backdoor compensation. If a conflict exists, it must be fully disclosed and they must mitigate it.Duty of Care
Fiduciaries must act with diligence, competence, and thoroughness. That includes making sure they understand your full financial picture and tailoring their advice accordingly. It’s not enough to suggest something that might work. They must recommend what is most suitable based on your situation. This is where most older advisors may fall short. They may be using strategies that were effective back in 1990 but if they are aware of newer strategies they could be falling short. Just because they have 40 years of experience doesn't mean they know what’s best for you. Those decades of experience could also have been filled with bad advice and poor performance. Age doesn’t make someone better.Duty to Follow Client Instructions
Once you’ve made a decision, a fiduciary must follow it(assuming it’s legal and in good faith). They aren’t there to override your wishes or push their own agenda.
“A fiduciary is someone who manages money or property for someone else. When you’re named a fiduciary and accept the role, you must – by law – manage the person’s money and property for their benefit, not yours.”
Who Should Be a Fiduciary?
The fiduciary standard applies to more than just financial advisors. Anyone managing assets on behalf of someone else should meet this bar. This includes:
Certified Financial Planners™ (CFP® professionals) — when providing financial advice, as outlined by their Code of Ethics
Trustees — managing assets in a trust
Executors — carrying out a will or estate plan
Pension plan administrators
Fee-only investment advisors — especially those registered under the Investment Advisers Act of 1940
However, not everyone who uses the term actually abides by the fiduciary standard in every part of their business. Many advisors hold dual roles, as a fiduciary and a broker, depending on the service or product being discussed.
A Note About Products and Commissions
Some advisors justify selling high-fee, commission-based products, like certain annuities, by claiming they’re necessary for retirement income. In rare cases, that might be true. But in my practice, I use annuities that don’t pay me a commission. They offer the same guarantees, without tying up your funds in surrender schedules or forcing you to hand over upfront fees.
The takeaway? If someone needs a commission to justify a recommendation, you have to ask: Is this really about me or about their paycheck?
How Can I Tell If I Really Work With a Fiduciary?
The CFP® designation is a good starting point. It shows that your advisor has met a high standard of education and ethics—and when giving financial advice, they’re supposed to act as a fiduciary.
But here’s the hard truth: that credential alone isn’t enough.
I know CFP® professionals who openly admit they’ve sold products for the commission, even when they knew there were better, lower-cost options available. The letters after someone’s name won’t protect you if their incentives aren’t aligned with your interests.
That’s why you need to dig deeper.
Ask direct questions:
How are you compensated for this recommendation?
Do you receive any commissions, referral fees, or backend payouts?
Are there other products or solutions that would accomplish the same goal with lower cost or less risk?
If they hesitate or dance around the answer, that’s a red flag.
A Real Story: The Annuity Rescue
One client came to me holding six different annuities, all sold by the same advisor. Every one of them came with large surrender fees and ongoing trailing commissions that were quietly being paid to the original advisor.
Worse, the advisor had failed to track the cost basis for these annuities, which created a massive tax risk if we liquidated them outright.
So we waited out the surrender periods and executed 1035 exchanges into fee-based annuities which have no commissions, no surrender charges, and lower internal expenses. We preserved the guaranteed income the client needed, especially because she was supporting both herself and her adult child with disabilities.
This wasn’t just about saving money. It was about restoring control, reducing unnecessary costs, and increasing monthly income to improve her quality of life. I call it an annuity rescue, but it never should’ve been needed in the first place.
That situation wasn’t the result of bad luck. It was the result of misaligned incentives and a client working with someone who claimed to be trustworthy but wasn’t acting as a true fiduciary. The advisor also worked for a very large well-known firm that openly advertises as a fiduciary.
What Are Fiduciaries Not Allowed to Do?
A fiduciary isn’t just expected to act in your best interest, they’re prohibited from acting in ways that serve themselves at your expense.
That includes:
Recommending a product without comparing alternatives.
If there’s a lower-cost, lower-risk, or more appropriate solution available, a fiduciary is required to consider it first. Recommending something simply because it pays them more is not only unethical, it’s a breach of fiduciary duty.Hiding fees or compensation structures.
Fiduciaries must be transparent about how they get paid. That means disclosing commissions, referral payments, expense ratios, and anything else that might influence their recommendation.Pushing a “suitable” product when a better one exists.
Brokers and insurance agents are only held to a suitability standard, they just have to recommend something that isn’t blatantly harmful. A fiduciary, by contrast, must recommend what’s in your best interest. That’s a big difference, and it matters.Prioritizing firm incentives or sales targets over client outcomes.
Fiduciaries must remain independent in their judgment, even if it means turning down a product their firm wants them to sell.
In practice, this means they don’t offer one-size-fits-all portfolios. They don’t push products with hidden fees. And they certainly don’t choose options that quietly benefit themselves more than you.
If someone skips the step of comparing alternatives, or avoids discussing lower-cost options, they’re not operating as a fiduciary, no matter what they call themselves.
How to Find a Fiduciary?
Finding a true fiduciary shouldn't feel like finding a needle in a haystack but sometimes it does.
To find a fiduciary who is legally bound to act in your best interest, start by looking in the right places:
XY Planning Network – every member is a fee-only CFP® professional committed to a fiduciary standard.
NAPFA (National Association of Personal Financial Advisors) – this network only admits fee-only fiduciaries.
Fee-Only Network – a directory of vetted fiduciary advisors who do not accept commissions.
These directories screen out advisors who earn commissions or operate under a suitability standard. You’ll still want to ask good questions but at least you’re starting with a pool of professionals who’ve made a public, professional commitment to put your interests first.
Choosing the right financial advisor isn’t just about performance. It’s about trust, transparency, and alignment. The kind of care you'd expect from your doctor, you should also expect from your financial planner.
Conclusion
Just like with your health care, you don’t want to take chances. If you needed surgery, you wouldn’t settle for a doctor who might be qualified, or who sometimes acts in your best interest. You’d look for someone with the right credentials, a clean track record, and no incentive to recommend the wrong treatment. You’d get a second opinion if something felt off. And you’d ask hard questions because your health is too important to risk.
The same mindset applies to your wealth.
Whether you’re selling a business, planning for retirement, or trying to make smart decisions with a lifetime of savings, the people you trust for advice matter. A fiduciary should bring more than credentials. They should bring clarity, loyalty, and a commitment to doing what’s right even when no one’s looking.
If you’re wondering how this applies to your situation, or just want a second opinion, I offer free initial consultations. No pressure. No sales pitch. Just a conversation to help you make more confident decisions.
Our Fiduciary Mission:
At Integritas Financial, we specialize in helping small business owners navigate the complexities of their financial lives, providing fee-only financial planning services with a fiduciary responsibility. Our mission is to serve as your trusted partner, offering personalized guidance that aligns with your unique goals and the demands of running a business.
We work closely with business owners to address critical financial areas, including business exit strategies, tax planning, retirement planning, asset protection, estate planning, and coordinating with your team of professional advisors. Whether you’re preparing for a business sale, planning for succession, or balancing personal and professional financial priorities, we help you build a comprehensive strategy tailored to your needs.
At Integritas, your financial success is at the heart of everything we do. As a fiduciary firm, we are committed to acting in your best interests, providing transparent advice without the pressure of commissions or product sales. We believe in empowering you to make informed decisions by simplifying complex financial matters and delivering solutions designed to support your long-term prosperity.
Whether you’re in the early stages of growing your business or preparing for a major transition, Integritas Financial is here to help you manage the intersection of business and personal finance with confidence. Let us partner with you to create a roadmap for your success, so you can focus on what you do best—running your business.
The information contained herein is intended to be used for educational purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. The content is not intended to be legal, tax or financial advice. Please consult a legal, tax or financial professional for information specific to your individual situation.
This content not reviewed by FINRA