The term fiduciary is a good thing to hear if you’re searching for a financial professional. Financial advisors hold a relationship of trust with a client and abide by fiduciary duty. Fiduciary duty is the ethical obligation to act solely in someone else’s best interest, which in theory should minimize conflicts of interest and make a financial advisor more trustworthy. Read on to learn more about what a fiduciary is and what fiduciary duty entails.

By definition, a fiduciary is an individual who is ethically bound to act in the client's best interest. This obligation minimizes the conflict of interest concerns and makes a fiduciary’s advice more trustworthy.

The term usually refers to someone who manages assets on the behalf of an individual, a family or a company. This person might be a banker, accountant, executor, trustee, board member, financial advisor or investment professional. In theory, a fiduciary can be anyone to whom you delegate personal, legal or financial choices. In other words, it’s up to you to choose wisely. In the financial industry, an Investment Advisor who is a Fiduciary has either a series 65 or 66 license. You can check a financial advisor on FINRA BROKER CHECK or the SEC website.

What is "fiduciary duty"?
Also known as fiduciary responsibility, fiduciary duty is the obligation to put someone else’s interests first. This duty is not just a matter of ethics – it’s a legal mandate that ensures that individuals receive the best possible financial advice. The mandate requires that fiduciaries act honestly, diligently and solely for your benefit.

Fiduciary duty protects you. It’s like the financial version of the Hippocratic oath – and it’s just as important.

How do I know if a financial professional is a fiduciary?
A 2017 survey by The American College of Financial Services found that 48 percent of people working with a financial professional did not know if their financial professional was a fiduciary. There are several resources available that can help you figure that out:

• Search the SEC site.
• Search FINRA Broker Check - Look for an IA Designation

The vetting process shouldn’t stop there. Once you identify potential advisors, here are the sorts of questions you should be asking to ensure that the advisor suits your needs and has minimal conflicts of interest:

• Do you have any disclosures?
   
• How are you compensated?
   
• What qualifications do you have?
   
• What services do you offer?
   
• How often are you willing to meet?
   
• What type of clients do you typically work with?

You should also request a copy of a financial advisor’s Form ADV (SEC-filed paperwork), which provides information about an advisor’s business, pay structure, educational background, potential conflicts of interest and disciplinary history. That information is also available online through the SEC’s Investment Advisor Public Disclosure tool.

Tips for finding a financial advisor

• Do your homework. Be sure to ask questions. Request a copy of a financial advisor’s Form ADV. Take note of an advisor’s fee structure, certifications, and any disclosures.
   
• Ask around. Word of mouth can be a useful resource. Asking friends or family members for recommendations can be a good way gauge how capable and reliable a financial advisor is.