Fiduciary

For money managers, the clearest statement is the SEC’s 2019 interpretation of the Investment Advisers Act. An adviser’s fiduciary duty applies to the entire relationship with a client, not just the moment of a trade, and it has two parts.

The duty of care starts with a reasonable inquiry into your financial situation, experience and goals, then requires advice in your best interest based on those objectives. It also covers seeking best execution when the adviser picks the broker for your trades, and monitoring at a frequency that fits the relationship. An adviser paid an ongoing asset-based fee owes relatively extensive monitoring; one hired to write a single plan for a single fee is unlikely to owe any.

The duty of loyalty means the adviser may not put its own interests ahead of yours. It must eliminate or make full and fair disclosure of any conflict that might incline it, consciously or unconsciously, to give advice that is not disinterested, so that you can give informed consent.

The duty cannot be waived, though you and the adviser can agree to narrow the relationship, and the duty then applies within that scope. It covers advice about which kind of account to use and whether to roll money over from a workplace plan.

Brokers are held to a different rule. Since June 30, 2020, Regulation Best Interest has required a broker-dealer and its representatives to act in a retail customer’s best interest at the time they recommend a securities transaction, an investment strategy or a type of account, without putting their own interests ahead of yours. It raised the bar above the older suitability standard, and the SEC says it cannot be satisfied through disclosure alone.

The biggest difference is time. An adviser’s duty covers the whole relationship, while Regulation Best Interest applies at the moment of each recommendation and imposes no duty to monitor your account afterward. The SEC chose not to adopt one uniform fiduciary standard for both. The rule has four parts:

Workplace retirement plans add a third layer. Under ERISA, a plan fiduciary must act solely in the interest of participants and beneficiaries, for the exclusive purpose of providing benefits and paying reasonable plan expenses, with the care of a prudent person familiar with such matters, and must diversify investments to minimize the risk of large losses unless that is clearly imprudent. For your 401(k), those duties sit with the employer or whoever it appoints to run the plan.

Whether an outside professional becomes a fiduciary by giving advice turns on a five-part test from 1975: advice on the value or purchase of securities, given on a regular basis, under a mutual understanding that it will be a primary basis for investment decisions, and individualized to the plan’s needs. The Department of Labor’s 2024 Retirement Security Rule, which followed a 2016 rule that a court vacated, would have widened that definition for plans and IRAs to cover more one-time recommendations. Two federal courts in Texas stayed it in July 2024 and it never took effect. After the appeal was dismissed in November 2025 and the courts entered final judgments in March 2026, the department published a notice on March 20, 2026, effective April 20, restoring the five-part test to the regulations.

So a one-time recommendation to move a 401(k) into a rollover IRA may fall outside ERISA’s fiduciary definition. It is still covered by Regulation Best Interest when a broker makes it and by the Advisers Act when an adviser does.

Fiduciary duty is far older than securities law. It comes from trust and agency law and arises whenever someone accepts authority to act for another person. Lawyers owe it to their clients, and corporate directors to their companies. When you name someone to one of the roles below in your estate plan, you are choosing a fiduciary.

If you are the one named, the Consumer Financial Protection Bureau publishes free guides for agents, guardians, trustees and government fiduciaries. Executors, trustees and guardians also answer to the IRS, which treats the fiduciary as the taxpayer for filing returns and paying tax; Form 56 tells the IRS when the role begins or ends. Common examples:

Titles won’t tell you. At a dual registrant, the same person may act as a broker in one account and an adviser in another, so the standard can change from account to account and even between recommendations.

Read the standard-of-conduct section of the firm’s Form CRS, which describes the standard for each service. Ask the advisor to confirm in writing that they act as a fiduciary for every account and every recommendation, including rollovers and insurance products. A CFP professional must act as a fiduciary whenever giving financial advice under CFP Board’s code, a private standard on top of the law.

Fiduciary status reduces conflicts; it does not remove them. An adviser paid a percentage of assets still earns less when money leaves its care, for example to pay off a Mortgage or to buy an Annuity, so ask any financial advisor how each recommendation affects what they are paid. A fiduciary should answer readily.