Is Your Financial Professional a Fiduciary? (Why You Should Know – And Care)
The answer to that question is important: It determines whether the person you’re working with is legally required to put your interests first.


Despite all the inside-the-industry fuss about the fate of the Department of Labor’s revised definition of “fiduciary,” commonly referred to as the fiduciary rule, many individuals still aren’t aware there’s a difference in the way various financial professionals are paid, or that they are held to different levels of accountability.
The rule, which was officially implemented on June 9, 2017, requires all financial professionals who work with retirement plans or provide retirement-planning advice to be legally and ethically required to rise to a fiduciary standard of care.
What does that mean to you?
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.

Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
What ‘fiduciary’ means for investors
You might be somewhat familiar with the term “fiduciary,” although not necessarily in this context. First and foremost, it means your financial professional is obligated to put your needs before his own when making recommendations on financial products and strategies.
In addition to acting in the client’s best interests, a professional held to the fiduciary standard must fully disclose his compensation and any conflicts of interest to the client.
Beyond that, a fiduciary has a “duty of care” and must continually monitor not only his clients’ assets, but also any change in their financial situations.
Let’s say a client had a change of heart after going through a tough stock market period and wanted to adjust his risk tolerance. Or perhaps a personal tragedy resulted in extreme medical expenses, and a client needed a new strategy to mitigate that burden. A fiduciary is obligated to help the client re-evaluate his financial strategy and work with him to help align his strategy with his financial goals and objectives.
If you’ve already been working with a fiduciary, you know: The first client meeting is just the beginning. Beyond his legal duty to you, your financial professional has a stake in your success because he’s paid based on a percentage of your portfolio. If you do well, so does he.
Which financial professionals aren’t held to the fiduciary standard?
If your financial professional is a stockbroker, he likely is paid through commissions and fees, and he is not held to this same standard.
A stockbroker is defined as any person engaged in the business of buying and selling securities for the accounts of others. Brokers are generally not considered to have a fiduciary duty to their clients.
Instead of being obligated to put his clients’ interests ahead of his own, a broker is expected to deal fairly with them and to adhere to a standard of care known as the “suitability standard.” A recommendation must be suitable for the client’s individual financial goals and objectives, but it doesn’t have to be the best or the least expensive choice.
What investors should do
If you aren’t sure if your financial professional is held to the fiduciary standard, ask. Look at how the individual is compensated, if his first obligation is to you or to the firm he works for, and how often he actualy checks in with you to see if your personal or financial situation has changed in any way.
For a younger individual who is still in the accumulation phase – and can afford to risk the ups and downs of the market and what it might do to his portfolio – going with a broker might be an OK option. And for some, it might be the only option, as financial professionals held to the fiduciary standard often set minimum amounts on the portfolios they’re willing to work with.
But for those who are going to retire in 10 years or less, or who already are retired, having a financial professional who is held to the fiduciary standard may be a wise choice. This is the time to get your financial plan in order, and using the professional skills of an experienced financial professional could increase your probability for a successful lifetime of retirement bliss.
Kim Franke-Folstad contributed to this article.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Michael Woloshin is an Investment Adviser Representative, insurance professional and the founder and managing director of Woloshin Investment Management. His priority is helping those who are about to retire or who already have retired pursue their financial independence utilizing customized income strategies. Woloshin has over 35 years of experience advising clients.
-
These Stocks Dipped in 2025. Do They Have Value?
If you are looking to add new long-term positions to your portfolio, as you should, this is the time to examine stocks that the market shuns.
-
Striking Gold (or Gas): A Financial Pro Unpacks the Nuances of Energy Investing
Investing in the energy industry, particularly oil and gas, involves understanding the facts about how projects generate returns through cash flow and long-term asset building, while also being aware of the risks.
-
Striking Gold (or Gas): A Financial Pro Unpacks the Nuances of Energy Investing
Investing in the energy industry, particularly oil and gas, involves understanding the facts about how projects generate returns through cash flow and long-term asset building, while also being aware of the risks.
-
Escaping the New Golden Handcuffs: A Financial Expert Has a Plan for Today's Executives
Feeling stuck in your job? It could be your complicated compensation package, but it also could be where you live, your family or even how you view yourself.
-
I'm a Financial Planner: Here's How to Invest Like the Wealthy, Even if You Don't Have Millions
Private market investments, once exclusive to the ultra-wealthy and institutions, have become more accessible to individual investors, thanks to regulatory changes and new investment structures.
-
Four Ways a Massive Emergency Fund Can Hurt You More Than It Helps
Saving too much could mean you're missing opportunities to put your money to work. Redirect some of that money toward paying off debt, building retirement funds, fulfilling a dream or investing in higher-growth options.
-
I'm a Financial Planner: How to Dodge a Retirement Danger You May Not Have Heard About
Timing is everything, and sequence of returns risk can mean the difference between a retirement nest egg that's overflowing … or empty.
-
Caring for Aging Parents: An Expert Guide to Easing the Financial and Emotional Strain
Early conversations, financial planning and understanding the progression of care needs can help to mitigate stress and protect family relationships.
-
I'm a Financial Adviser: The OBBB Is a Reminder for Older People to Have a Long-Term Plan
The new tax bill presents a good opportunity for retirees to revisit tax plans, look into doing some Roth conversions and consider plans for long-term care.
-
I'm an Insurance Expert: This Is Exactly Why Your Insurance Rates Are Soaring (and What You Can Do)
A dramatic rise in the frequency and cost of severe weather and wildfires means you need to prepare, prepare, prepare — no matter where you live — for higher premiums.