When you’ve spent years building wealth, the question of who you trust to help manage it can become more than a checklist item. It’s a decision that can shape your family’s financial future for decades. You should consider someone who’s not just qualified, but who will put your interests first. That’s where a fiduciary firm or professional comes in.
In 2025, the number of investment advisers registered with the Securities and Exchange Commission (SEC) reached a record high of 16,544, serving 73.7 million clients.1 With that many firms, knowing how to distinguish a fiduciary from a nonfiduciary can be helpful. The term gets used a lot, but its meaning is specific and grounded in law.
Whether you’re considering hiring a financial adviser firm or a financial advisor professional, understanding what a fiduciary is — and how to verify that yours operates as one — can help you make a more informed decision about who manages your wealth.
What fiduciary duty means
A fiduciary financial advisor is a professional legally and ethically bound to act in your best interests. This obligation stems from the Investment Advisers Act of 1940, which established that registered investment advisers owe their clients a fiduciary duty.2 The SEC reaffirmed and clarified this standard in its 2019 interpretation, stating that an adviser or advisor must at all times serve the best interests of their client and not subordinate its client’s interests to their own.3
The fiduciary duty has two core parts:
- Duty of care: Your advisor must provide advice based on your specific financial situation, goals, and risk tolerance and not provide generic recommendations. This includes ongoing monitoring and a prudent, informed approach to every decision.
- Duty of loyalty: Your advisor must place your interests above their own, avoid or fully disclose conflicts of interest, and never profit at your expense. If a conflict exists, you deserve to know about it and have the opportunity to give informed consent.
Together, these duties mean your advisor can’t recommend a product because it pays them more or steer you toward an investment that benefits their firm over you. The standard applies to the entire advisory relationship — not just a single transaction.
Fiduciary vs. financial advisor: Understanding the difference
Not every person who calls themselves a financial advisor operates as a fiduciary. The distinction between a fiduciary and a nonfiduciary financial advisor matters because it comes down to the legal standard they’re held to.
Broker-dealers, for example, are regulated under Regulation Best Interest (Reg BI), which requires them to act in a retail client’s best interests at the time a recommendation is made.4 But Reg BI doesn’t impose a continuous duty of care or loyalty the way the Investment Advisers Act does. A broker can still earn commissions and face conflicts of interest, as long as they disclose them.
A fiduciary advisor, by contrast, operates under a higher, ongoing standard when acting in an advisory capacity. The duty applies throughout the advisory relationship and not just at the point of sale or recommendation.
Why fee-based matters
How your advisor is paid is one of the clearest signals of fiduciary alignment. A fee-only fiduciary is paid solely by their clients: through a percentage of assets under management, a flat fee, or an hourly rate. They don’t earn commissions on the products they recommend, which helps reduce a common source of potential conflict of interest.
When your advisor’s compensation isn’t based on selling specific products, recommendations may be more closely aligned with your objectives and overall financial strategy. Some advisors are compensated through a combination of client fees and commissions from product sales, which may create different incentives than fee-based or fee-only arrangements. Understanding how your advisor is compensated can help provide context for evaluating recommendations and determining whether the relationship aligns with your preferences and goals.
How to verify fiduciary status
Don’t just take someone’s word for it. You can verify through public records whether a professional is a registered investment advisor and, therefore, held to the fiduciary standard.
The SEC’s Investment Adviser Public Disclosure (IAPD) database lets you search by name, firm, or Central Registration Depository (CRD) number to view a firm’s Form ADV brochure. Form ADV Part 2A is the document that registered investment advisers file with regulators, and it lists the adviser’s solutions, fees, conflicts of interest, and disciplinary history.
Here’s what to look for:
- Registration status: Confirm the firm is registered as an investment adviser, not just a broker-dealer.
- Form ADV Part 2A: Read the brochure for solutions, fees, and conflict disclosures.
- Item 5: Check how the firm is paid. This is where you can confirm fee structure status.
- Disciplinary history: Look for any regulatory actions or complaints.
If someone appears only on FINRA’s BrokerCheck and not on IAPD, they may be a broker, not a fiduciary advisor. If they appear on both, ask which capacity they’re serving in when advising you.
10 questions to ask
A short conversation can tell you a lot. Consider asking the following questions:
- Are you a fiduciary? Can you confirm that in writing?
- Are you fee-based or fee-only?
- What solutions do you provide beyond investment management?
- How do you address conflicts of interest?
- What is your approach to tax planning?
- How do you coordinate with my estate planner or tax professional?
- What is your investment philosophy?
- How often do you review and rebalance my portfolio?
- What are your total fees, and how are they calculated?
- Can I see your Form ADV before we proceed?
How fiduciary advice fits your broader plan
For families with established wealth, fiduciary advice sits at the intersection of several planning disciplines. The integration or coordination of them all can provide value.
When your investment strategy, tax planning, estate documents, and insurance coverage are all guided by the same fiduciary standard, you can get a broader, coherent financial picture. Decisions in one area can inform decisions in another, helping reduce the risk that important details are overlooked.
Financial planning
A fiduciary starts by understanding your full financial picture, including your goals, your family, your timeline, and the assets you’ve built. From there, they can build a comprehensive plan that ties every decision back to what matters most to you. Because the fiduciary standard requires advice based on your specific situation, the plan is yours, not a template.
Investment management
A fiduciary’s duty of care means your portfolio is managed with ongoing attention to your goals, risk tolerance, and changing circumstances. A fiduciary can’t set your investments on autopilot and step away. The duty of care requires continuous monitoring and informed adjustments.
Tax planning
A fiduciary can help coordinate investment decisions with tax efficiency. This may include harvesting losses, managing concentrated positions, and timing transactions to help reduce tax drag. Because their pay doesn’t depend on selling specific products, the advice can focus on what benefits you.
Estate planning
A fiduciary can collaborate with your estate planner to help ensure your investment strategy aligns with your trust structures and wealth transfer goals. Coordinated planning across these disciplines — rather than siloed advice from separate professionals — can help protect what you’ve built and move it efficiently to the next generation.
Insurance solutions
A fiduciary can review your coverage, such as life, disability, and extended care, through the lens of your overall risk picture, rather than as a stand-alone transaction.
Red flags to watch for
A few signs should prompt questions: reluctance to put fiduciary status in writing, vague answers about pay, pressure to buy proprietary products, or an unwillingness to share Form ADV Part 2B. None of these automatically signal a problem, but they’re worth clarifying before you commit.
The bottom line
A fiduciary is held to the highest standard of care in the industry. For families who have spent years building wealth, that standard offers something worth considering: a legal framework designed to keep your advisor’s interests aligned with yours. The verification takes a few minutes. The confidence it brings can last much longer.
Mercer Global Advisors is an independent, SEC-registered investment adviser obligated to always operate in your best interests. We offer a family office for your family, an integrated approach to wealth management that includes financial planning, investment management, tax planning and preparation, estate planning, insurance solutions, and trustee services.
FAQs
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A fiduciary financial advisor is an advisor who is legally obligated to put your interests ahead of their own — always. Unlike advisors held only to a suitability standard, fiduciaries must disclose conflicts of interest and recommend the most appropriate solution for you, not merely an acceptable one. Registered investment advisors (RIAs) registered under the Investment Advisers Act of 1940 are held to this standard. When you work with a fiduciary, you can gain confidence that every recommendation serves your goals first. Ask any advisor to confirm their fiduciary status in writing before you engage.
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Fiduciary duty has two parts: a duty of care and a duty of loyalty. Duty of care means your advisor provides informed advice based on your goals and circumstances, with ongoing monitoring. Duty of loyalty means they place your interests above their own and disclose any conflicts of interest. Together, these obligations require the advisor to act in your best interests at all times.
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That’s up to you. Fiduciary status gives you a legal framework that helps keep your advisor’s incentives aligned with yours. A fiduciary can’t recommend products that benefit them more than the products benefit you, and they must disclose potential conflicts of interest. For families with established wealth, this standard provides meaningful protection.
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You can verify fiduciary status through the U.S. Securities and Exchange Commission’s Investment Adviser Public Disclosure (IAPD) database at adviserinfo.sec.gov. Search by the firm name, or CRD number to view their Form ADV 2A, which lists their registration status, solutions, fees, and disciplinary history. If it appears only on FINRA’s BrokerCheck and not on IAPD, the firm may be a broker-dealer.
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Investment Adviser Representatives are fiduciaries; you can determine if your financial advisor is an investment adviser representative through the SEC’s Investment Adviser Public Disclosure (IAPD) website at adviserinfo.sec.gov. Search by the advisor’s name to view their information and IAPD detailed report. You can also request the advisor’s Form ADV 2B which discloses registration status, services, fees, conflicts of interest, and any disciplinary history. Ask them to walk you through it before you commit.
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Start by searching the IAPD database for registered investment advisers in your area. Look for fee-based or fee-only firms, check Form ADV 2A for solutions and conflicts, and interview candidates with a list of questions about their fiduciary status and pay. Mercer Global Advisors operates as a fiduciary and offers complimentary consultations to help you evaluate fit.
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Mercer Global Advisors as a firm is a fiduciary adviser legally held to the highest standard — our wealth advisors must act in your best interests at all times, with a continuous duty of care and loyalty. The term “financial advisor” applies to individual professionals and could include professionals held to different standards — such as brokers regulated under Regulation Best Interest, which applies at the point of a recommendation rather than throughout the relationship. Titles such as wealth manager or investment advisor may also be used regardless of whether the professional is acting in a fiduciary capacity.
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Fee-only advisors are paid solely by their clients and don’t earn commissions on product recommendations, which may help reduce a potential conflict of interest. Advisors who earn commissions may face incentives that differ from those of fee-based or fee-only advisors. While no compensation model eliminates all potential conflicts, fee-based and fee-only arrangements may reduce incentives tied directly to product sales.
1“2026 Investment Adviser Industry Snapshot Shows Continued Growth in Demand for Adviser Services.” Investment Adviser Association, June 3, 2026.
2,3 “Commission Interpretation Regarding Standard of Conduct for Investment Advisers.” U.S. Securities and Exchange Commission, June 5, 2019.
4 “Regulation Best Interest.” U.S. Securities and Exchange Commission, Sept. 9, 2019.
All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. Some of the research and ratings shown in this presentation come from third parties that are not affiliated with Mercer Advisors. The information is believed to be accurate but is not guaranteed or warranted by Mercer Advisors. Content, research, tools and stock or option symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or to engage in any particular investment strategy. All investing involves risk, including the possible loss of principal. These links are being provided as a convenience and for informational purposes only; they do not constitute an endorsement or an approval by Mercer Advisors of any of the products, services or opinions of the corporations or organizations or individuals represented in the links. Mercer Advisors bears no responsibility for the accuracy, legality or content of the external sites or for that of subsequent links. Contact the external site for answers to questions regarding its content.
For financial planning advice specific to your circumstances, talk to a qualified professional at Mercer Advisors.
Mercer Advisors is not a law firm and does not provide legal advice to clients. All Estate planning document preparation and other legal advice are provided through select third parties, with which Mercer Advisors has a contractual relationship. Tax preparation and filing services are provided by Mercer Advisors Tax Services, LLC. Clients will sign a separate agreement when engaging Mercer Advisors Tax Services that defines the services provided and any additional fees that may apply. Insurance products are provided by Mercer Advisors Insurance Services, LLC (MAIS), which places individual life, disability, long term care coverage, and property and casualty coverage through select insurance companies. Trustee services are offered through select third parties with which a client would sign an additional agreement, and additional fees may apply.
