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What is a fiduciary financial advisor?

September 01. 2023

In a complex financial landscape, consumers seeking financial advice need someone they can trust without reservation. Enter the fiduciary financial advisor — a professional bound by law and ethics to act in their clients' best-interests. While many financial advisors claim to be fiduciaries, true fiduciary advisors take transparency and client-centeredness to the next level.

In this post, we'll explore the world of fiduciary financial advisors, how they operate, and why they should be your top choice when it comes to safeguarding your financial future.

What is a fiduciary financial advisor?

A fiduciary financial advisor is a financial professional who adheres to a legal and ethical duty to always act in the best interests of their clients. This “fiduciary standard” dictates that advisors must put their clients' interests ahead of their own and avoid all conflicts of interest that could bias their decision-making toward their benefit over their clients’. When working with a fiduciary advisor, you can trust that your interests come first across all aspects of the advisor/client relationship, including in the financial recommendations your advisor makes and the way in which she or he is compensated.

Fee structures: a transparent approach

One significant benefit of working with a fiduciary advisor is their transparent fee structure. Unlike commission-based advisors who are paid based on product sales, fiduciaries charge a fee for their advice, eliminating the conflicts that can arise when an advisor is both making recommendations and being paid for sales of the recommended products.

Commissions are considered an inherent conflict of interest for fiduciaries because they can incentivize advisors to prioritize their own financial gains over what’s in the best interest of their clients. So, fiduciaries don’t accept commissions.

On the other hand, a common misconception is that ALL advisors who are “fee-only” are “fiduciaries”. Being a fiduciary is about more than just how an advisor is compensated. Fiduciary advisors consider all available options to find financial solutions that are in the best interest of each client’s individual wants and needs. And that means considering annuities for clients who could benefit from them.

Learn about the basics of annuities and how they work. 

Benefits of fiduciary financial advisors

Fiduciary financial advisors offer a range of benefits that make them a preferred choice for individuals seeking transparent and comprehensive financial guidance:

  1. Unbiased advice: Fiduciaries are legally obligated to act in your best interest and are compensated for their advice rather than for product sales, helping to ensure their recommendations are solely focused on your financial well-being.
  2. Transparency: Fiduciaries operate with transparency, actively avoiding conflicts of interest and disclosing any potential conflicts and fees upfront, allowing you to make informed decisions.
  3. Personalized approach: Fiduciary advisors tailor their advice to your specific financial goals, risk tolerance and circumstances, creating a personalized financial plan that aligns with your individual needs.
  4. Comprehensive planning: Fiduciaries take a holistic view of your financial life, addressing various aspects such as investment management, retirement planning, tax optimization, estate planning, and more.
  5. Conflicts of interest mitigation: Fiduciaries do not accept commission-based compensation for product sales, eliminating a conflict of interest that could influence their recommendations.
  6. Long-term focus: Fiduciaries prioritize your long-term financial security, helping you navigate life events, economic fluctuations, and market volatility with a well-structured plan.
  7. Risk management: Fiduciaries provide guidance on managing investment risks and building portfolios that align with your risk tolerance and financial goals.
  8. Ongoing monitoring: Fiduciaries offer continuous oversight of your financial plan, adjusting strategies as needed to ensure you stay on track toward your objectives.
  9. Educational insights: Fiduciaries often educate clients about financial concepts, empowering you to make informed decisions and become more financially literate.
  10. Legal and ethical obligations: Fiduciaries are held to high legal and ethical standards, providing you with a sense of security knowing that your advisor is bound by law and fiduciary duty to act in your best interest.
  11. Goal achievement: Fiduciaries help you define clear financial goals and work collaboratively to achieve them, providing regular progress updates and adjustments as needed.
  12. Peace of mind: With a fiduciary financial advisor, you can have confidence that your financial future is in capable hands, allowing you to focus on other aspects of your life.

Planning for retirement with fiduciary guidance

A fiduciary financial advisor brings an unbiased approach to retirement planning that helps ensure you get a plan tailored to your individual needs. They assess your risk tolerance for income, understand your wants and concerns, and consider a range of solutions to find those that best achieve your goals.

For instance, research shows that retirees' primary concern is the fear of outliving their savings, making prudent financial management essential. A fiduciary's role is to create a plan that addresses this concern, and often will include a source of guaranteed income like an annuity.

If you’re working with an advisor who refuses to consider an annuity for your retirement income plan, especially if you’re interested in securing guaranteed lifetime income, ask why. There may be a conflict of interest. Before the advent of commission-free annuities, many advisors couldn’t bill on these products, and therefore didn’t recommend them, even for clients who were interested in the benefits they provide.

"When we talk about insurance and annuities, we are talking about core products to retirement,” says David Lau, Founder and CEO of DPL Financial Partners, in an episode of The Investors First Podcast. “I don't think you can be a fiduciary if you don't consider them."

Don’t assume that just because an advisor is fee-only and doesn’t accept commissions, she or he is a fiduciary. Fiduciaries will always consider a range of options and recommend the best solution for your needs, regardless of the profits they stand to earn from the recommendation.


In the complicated world of personal finance, the fiduciary financial advisor emerges as a trustworthy source of expertise and guidance to serve your unique financial and psychological needs. Bound by law and ethics, fiduciaries always act in their clients' best interests by embracing the highest standard of care.

If you’re interested in working with a fiduciary financial advisor, DPL can connect you with advisors you can talk to. Contact a DPL consultant at 1-877-625-5544.