Being a Fiduciary Is a Choice, Not a Credential

Consumers overwhelmingly believe fiduciary advice is the standard. But it’s not.

Every week I have the pleasure of meeting over Zoom with finance students studying to become advisors through the financial planning program at Brigham Young University–Idaho. Over the course of an hour, they ask thoughtful questions about what it’s really like to be a financial advisor. They’re motivated, curious, and excited to launch careers helping families prepare for retirement and navigate some of life’s biggest financial decisions.

At the outset, I always ask the same question:

“What kind of financial advisor do you want to be?”

Most assume I’m asking what area of financial planning they want to specialize in. I’m not.

I’m asking whether they want to practice as a fiduciary—legally obligated to put their clients’ financial interests first—or under a different business model.

That’s usually the light bulb moment.

Like most consumers, many assume becoming a fiduciary requires another exam, another credential, or some complicated approval process. It seems logical. If you’re going to accept that level of legal responsibility, surely there must be another hurdle to clear.

There isn’t.

Being a fiduciary isn’t a badge or even a credential you earn. It’s a legal standard you choose. Every advisor entering this profession reaches the same fork in the road. They can build a career in the brokerage world, where compensation often comes from selling financial products, or they can choose the fee-only fiduciary model, where they’re legally obligated to act in their clients’ best financial interests 100% of the time.

Then there’s the hybrid, or fee-based, model. These advisors can wear both hats—sometimes acting as fiduciaries and other times acting as brokers selling commissioned products. The legal standard depends on which hat they’re wearing at the time.

To me, that’s like wearing a seatbelt only on certain roads. You’re either buckled in for the entire trip, or you’re not.

Would you knowingly choose an advisor who’s only legally obligated to put your interests first part of the time?

Back to the students.

I ask them one more question:

“Why would someone offering advice choose not to be a fiduciary?”

So far, not one has told me they would. But the students are the exception, not the rule because in the real world, the vast majority of financial advisors have chosen not to practice as fee-only advisors 100% of the time.

They all have the same opportunity. Yet out of roughly 834,000 financial professionals in the United States tracked by the U.S. Bureau of Labor Statistics, only a small minority operate as true fee-only fiduciaries. At the same time, most people who already have a financial advisor mistakenly believe their advisor is legally required to act in their best interests. And according to a recent CFP Board survey, 97% of Americans believe financial professionals should be required to put their clients first.

That’s an astonishing disconnect.

Consumers overwhelmingly believe fiduciary advice is the standard. Most already assume they have it. In reality, very few do.

I’m not telling you what to do with that information. But I do think you deserve to know it before deciding who you’ll trust with your financial future. If you want to see your options, you can browse Wealthramp’s network of fee-only, fiduciary advisors anytime.

I made my choice years ago.

P.S. We’re in the news! I spoke to the Wall Street Journal’s Buy Side about what consumers need to know about wrap fees. Check it out here.