The Fiduciary Standard: Why is it so important?


Are your financial advisors working in your best interests? Or their own? It's a very big deal and you must find out. Fortunately, it's easy to do. Just ask!

Financial advisors in the US come in all shapes and sizes but they generally can be put in one of three categories .. a broker (think any bank or credit union or Merrill Lynch, Morgan Stanley etc.), an insurance agent (think Northwestern Mutual, Prudential etc.) or a Registered Investment Advisor (think Anglia Advisors etc.) 

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Here is the best list I have seen recently of the questions that you should ask any financial advisor before you consider hiring them.


Every financial advisor is legally subject to one of two standards: the fiduciary standard or the suitability standard.


...requires that advisors always put their clients' best interests ahead of their own and those of their employers, disclosing any and all conflicts of interest and resolving any conflicts that may arise to the benefit of the clients. Solutions can be recommended only if they are, in the opinion of the advisor, the best available in terms of the clients’ interests, regardless of any advantage that may be accrued to advisors by recommending them.

It imposes a duty of loyalty and care on advisors, ensuring they do their best to give the most thorough and accurate analysis possible. Advisors must guarantee that clients understand the cost implications of the entire engagement (not just the fees you are paying to them).

The client is at the heart of the fiduciary relationship.



...offers no such comfort. Instead of placing the clients’ interests above their own, the suitability standard only requires these advisors to "reasonably believe" that any recommendations made will not be entirely unsuitable for their clients. Another key distinction is that the advisors’ first duty is not to their clients, but to their employers. As long as it falls within the broad suitability requirement, recommending the least suitable of what can be a multitude of "suitable" options still satisfies the suitability standard.

The suitability standard also invites severe conflicts of interest in terms of advisor compensation, which varies greatly from one product to another. This incentivizes advisors to promote and sell products that best benefit themselves in terms of commission, far ahead of what is most beneficial for their clients. Advisors are not even required to disclose any of these conflicts of interest to their clients who are unlikely to ever know, unless they specifically ask.

Scandalously, the suitability standard does not even require advisors to make any attempt whatsoever to try to minimize these conflicts.

The product is at the heart of the suitability relationship.

According to the White House Council of Economic Advisers, the suitability standard costs Americans $17 BILLION in unnecessary fees and commissions, pocketed every year by non-fiduciary firms and advisors.


Imagine one hundred available investment options, ranked from 1-100 in order of how suitable they would be for you. Let's say 10 of them are clearly entirely unsuitable in your case.

An advisor under the Suitability Standard could perfectly legitimately recommend the 89th or 90th most suitable investment for you on that list, if it benefitted him and his employer the most in commissions paid out by the provider of that investment, and he would still meet the Suitability Standard. 

An advisor under the Fiduciary Standard must, by law, recommend the option that he believes to be the number one investment in your best interests from that list - and receives no commissions from the provider of that investment for doing so.

That's the difference!

75% of investors mistakenly believe that financial advisors at brokerage firms are required to put their client’s interests first.

Only 10% of Americans feel that using an advisor on commission-based compensation would be “good for them”.

93% state that they consider it to be important that all financial advisors be legally required to put their clients’ best interest first.
— Sources: Bloomberg News (2013) and Financial Engines (2016)

The New York Times examines the issue in an article here

PBS produced a wonderful documentary on the subject that you can see here

For a more irreverent take, watch John Oliver here



Anglia Advisors is proud to be listed as a committed firm by the Committee For The Fiduciary Standard.

Does your advisor eat his/her own cooking? Make sure you ask: “Are you personally invested in the exact same products that you will be recommending to me?”. The answer may be illuminating.

Your Anglia Advisors CERTIFIED FINANCIAL PLANNER™is personally entirely invested in the exact same products and on the exact same platform that he will be recommending to you.

Would you allow a doctor to treat you if he refused to commit to always act in the best interests of your health and took kickbacks from just one brand name pharmaceutical firm for prescribing their products? Of course not.

But you are putting your financial health at the same kind of risk if you work with a commission-based advisor who is not a fiduciary.

So, whether you engage with Anglia Advisors or not, please do NOT hire a financial advisor who will not commit in writing to act as a fiduciary to you at all times for all of their services.

Beware of titles. There is no regulation which covers what anyone calls themselves. Being called a financial planner, financial advisor, financial coach, money coach, investment advisor, wealth manager or any other seductive name is meaningless. Anyone can give themselves these titles and requires no qualifications to do so.

Qualifications such as CFP®, however, are indicative of a very significant course of study, the passing of a highly challenging exam and adequate, appropriate experience in financial planning.

The CFP® designation also generally comes with a requirement for the advisor to act as a fiduciary when conducting financial planning, although as this article points out, there are still some questions you need to ask about compensation methods and employer obligations, even if your advisor does hold a CFP® designation (see below for exactly what to ask them).

As a Registered Investment Advisor (RIA), however, a fiduciary responsibility is mandated. It is this type of firm you should seek out.



We strongly recommend that you download and print this form.

Bring it with you to every initial consultation that you have with any kind of financial advisor (including any insurance company offering "financial planning", as they like to call it - it's not, it's just a means to get you to buy more insurance).

Ask them all if they are willing to sign it right then and there on behalf of both themselves and their firm (FYI: we sign this form for all our clients, see above) and provide you with a copy on the spot

If the advisor is unwilling or unable to sign this fiduciary form which simply commits him/her to putting your interests ahead of their own, or says he needs to "discuss it with his manager", then it is our strong belief that you are putting yourself at risk by working with him/her and you should quickly walk away and only consider working with an advisor who is willing to sign it then and there. 

If you already work with a financial professional, ask them these questions as well and ask them to sign the downloaded fiduciary form. If they fail to answer the questions to your satisfaction or are unwilling or unable to do provide you on the spot with a signed version of the downloaded form, then it's our view that it is definitely in your interests to be looking for a new advisor immediately.

You can easily check the public disclosure, regulatory, licensing and disciplinary history of any financial advisor by clicking either here or here (depending on which licenses or designations the advisor holds).

You can also check here if your advisor has been named as a defendant in any SEC federal court actions or a respondent in any SEC administrative proceedings.

The SEC's Investment Advisor Public Disclosure Report and regulatory history for Simon Brady, CFP® can be found by entering the name here.