When seeking financial advice from a professional, one of the most important and often misunderstood distinctions is the difference between a dually registered advisor and a true, fee-only fiduciary.
A dually registered advisor operates under two regulatory frameworks: they are both Investment Adviser Representatives and registered Broker-Dealers. In practice, this means they can charge fees for financial planning or investment advice, but they can also earn commissions by selling financial products like mutual funds, annuities, and life insurance. While they may say they’re acting as a fiduciary when giving advice, they can switch to a less strict standard — like Regulation Best Interest (Reg BI) or the “suitability” rule — when selling products. That shift can create potential conflicts of interest, especially when their compensation depends on what they sell.
In contrast, a true, fee-only fiduciary is legally and ethically bound to act in your best interest at all times. These advisors do not sell commissioned products and do not receive third-party compensation. Their revenue comes solely from their clients, typically through hourly rates, flat fees, or a percentage of assets under management. Because there are no incentives to recommend specific financial products, the advice you receive from a fee-only advisor is more likely to be objective and aligned with your best interests.
It’s important to note that a fiduciary standard is not something that can be turned on and off. An advisor who claims to be a fiduciary while also selling commission-based products is not upholding the fiduciary duty consistently. A “sometimes fiduciary” is not a fiduciary at all.
According to the latest data from FINRA, 45% of securities industry professionals are dual registrants, meaning they’re both Investment Adviser Representatives and Broker-Dealers, while 43% of professionals are strictly Broker-Dealers and only 12% are strictly Investment Adviser Representatives, the group that operates under the fiduciary standard exclusively.[1] This makes it more important than ever for consumers to understand the regulatory status and compensation model of the advisors they work with.
To ensure you’re working with a true fiduciary, look for advisors affiliated with fee-only organizations such as the National Association of Personal Financial Advisors (NAPFA.org). Also, be informed. Understand what the fiduciary standard is and why it matters. Always ask how an advisor is compensated, whether they receive commissions, and whether they are legally obligated to act as a fiduciary at all times. A helpful guide is Form CRS or Customer Relationship Summary which may be available by request or on a firm’s website.
In a financial landscape that can be filled with blurred lines and mixed incentives, clarity and transparency are essential. Hiring a professional who is truly on your side can make a significant difference in your financial future.
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