Is My Broker a Fiduciary? Learn the difference, and make a smart decision.

Look to see if your broker is a fiduciary

Is Your Broker a Fiduciary? A RIA is and must follow the “trust” standard. This requires them to place the interests of their clients ahead of their own.

Registered Investment Advisor Brokerage Firm
Fiduciary Suitability
Advice Transactions
Transparency Disclosure
3rd-party custody In-house custody

In a 2010 poll published in Forbes, 75% of those questioned believed that the term “financial advisor” implied a fiduciary duty. It does not. 75% also thought that “financial planners” are held to a fiduciary standard. However, they may not be.



A Registered Investment Advisor is a fiduciary. They must follow the “trust” standard which requires them to place the interests of their clients ahead of their own. They must also fulfill critical fiduciary duties of trust and confidence.

Under the fiduciary trust standard, a Registered Investment Advisor must provide its best advice to a client.

Stockbrokers or registered representatives (sometimes called investment advisors, financial advisors, wealth managers, etc.) are governed by the “suitability” standard and are not fiduciaries. The “suitability” standard does not require a stockbroker to place the interests of its clients ahead of its own.



Under this non-fiduciary suitability standard, a stockbroker needs to provide only suitable advice to its clients. This is so, even if the stockbroker benefits from these recommendations more than alternatives that are better for the client.

In the end, a Registered Investment Advisor is subject to the high fiduciary legal standard when providing investment advising services. Meanwhile, the stockbroker is not. This could have a significant effect on the quality and composition of your portfolio, the fees that you pay and the eventual performance outcome.


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