Glossary
Fiduciary
A fiduciary is a person or firm legally required to act in another party's best interest, ahead of their own.
In investment advice, a fiduciary must put the client's interests first, disclose conflicts of interest, and avoid arrangements that pay more for recommending one product over another. Not everyone who gives financial advice is held to this standard: registered investment advisers owe a fiduciary duty at all times, while brokers and insurance agents may instead be held to a suitability or best-interest standard, which asks whether a recommendation is appropriate — not whether it is the best available option.
Why it matters in practice
The difference usually shows up in compensation. If an adviser earns more for selling a particular annuity or fund, their incentive and the client's interest can diverge. A fee-only fiduciary is paid only by the client, which removes that particular conflict — see our fiduciary standard and how we are paid.
In California
Investment advisers operating in California register with the SEC or the California Department of Financial Protection and Innovation and owe clients a fiduciary duty; any adviser's registration can be verified free at adviserinfo.sec.gov.
Related terms: Fee-Only · Registered Investment Adviser (RIA) · Suitability · Form ADV · ERISA