The investment companies legally required to act as fiduciaries are firms registered as investment advisers under the Investment Advisers Act of 1940, whether they register with the Securities and Exchange Commission or with a state securities regulator. This category covers traditional wealth management firms, independent financial planners, and automated investing platforms known as robo-advisors. Brokerage firms, insurance agents, and most people selling financial products for commissions are not fiduciaries in the same sense, even when they use titles that sound similar. You can confirm whether any specific firm is a registered investment adviser, and therefore a fiduciary, for free at adviserinfo.sec.gov.
Which Firms Carry the Fiduciary Duty
The fiduciary obligation attaches to firms registered as investment advisers under the Investment Advisers Act of 1940.1eCFR. 17 CFR Part 275 Rules and Regulations, Investment Advisers Act of 1940 The common thread across the firms in this category is that they charge a fee for investment advice or portfolio management and have registered accordingly. That includes:
- Registered investment advisers (RIAs), the umbrella term for advisory firms.
- Wealth management firms that manage portfolios for individuals and families.
- Independent financial planning practices offering ongoing advice.
- Robo-advisors that build and manage portfolios through algorithms.
Whether a firm registers with the SEC or with a state depends mostly on how much money it manages. Advisers with at least $100 million in assets under management may register with the SEC, and those reaching $110 million must do so.2eCFR. 17 CFR 275.203A-1 Eligibility for SEC Registration Firms managing less than $25 million generally register with their home state, and mid-sized firms between $25 million and $100 million typically register at the state level as well, with a few narrow exceptions.3U.S. Securities and Exchange Commission. Transition of Mid-Sized Investment Advisers The fiduciary duty is identical either way. A small state-registered planner managing $10 million owes you the same standard of care as a national firm managing billions.
Fee-Only and Fee-Based Firms Are Both Fiduciaries
A fee-only adviser gets paid exclusively by clients, usually a percentage of assets under management, a flat fee, or an hourly rate. A fee-based adviser also collects client fees but earns additional money selling insurance policies, mutual fund shares, or similar products. Both models can be registered investment advisers, and both are bound by fiduciary law. The practical difference is conflict exposure: fee-only firms have structurally fewer conflicts to manage, while fee-based firms must disclose the commissions and revenue-sharing arrangements that shape their recommendations. The typical assets-under-management fee runs around 1%, though flat and hourly arrangements are increasingly common.
Where the Fiduciary Label Does Not Apply
Several categories of financial professionals interact with investors without owing them a fiduciary duty. Knowing which is which prevents the most common misunderstanding in this area.
Broker-dealers, the firms that execute securities trades and employ most stockbrokers and registered representatives, operate under Regulation Best Interest (Reg BI). Under Reg BI, a broker must act in the retail customer’s best interest at the time a recommendation is made and cannot place the broker’s financial interest ahead of the customer’s.4eCFR. 17 CFR 240.15l-1 Regulation Best Interest The language sounds close to a fiduciary standard, but two differences matter:
- A broker generally has no obligation to monitor your account after making a recommendation. A fiduciary investment adviser must monitor your portfolio over the life of the relationship.5Securities and Exchange Commission. Commission Interpretation Regarding Standard of Conduct for Investment Advisers
- A fiduciary must eliminate or fully disclose material conflicts. A broker under Reg BI must mitigate or eliminate them, which in practice allows conflicts to persist as long as internal policies address them.
Many large firms are “dual registrants,” registered as both broker-dealers and investment advisers. When a dual registrant provides you with advisory services, it acts as a fiduciary. When it executes a trade recommendation through its brokerage arm, it may be operating under Reg BI instead.6U.S. Securities and Exchange Commission. Staff Bulletin: Standards of Conduct for Broker-Dealers and Investment Advisers Conflicts of Interest The question isn’t only whether a firm is a fiduciary somewhere in its business. It’s whether the firm is acting as one in your specific relationship.
One more boundary worth naming: a broker who recommends rolling your 401(k) into an IRA is often not treated as a fiduciary for that recommendation under current law. The Department of Labor’s 2024 Retirement Security Rule would have changed that, but a federal court in Texas issued a nationwide injunction blocking the rule in July 2024, and the DOL later dropped its appeal. The narrower older definition still controls.
What a Fiduciary Firm Owes You
The SEC’s 2019 interpretation frames the fiduciary duty as two obligations that run together throughout the relationship.5Securities and Exchange Commission. Commission Interpretation Regarding Standard of Conduct for Investment Advisers
The duty of care requires the adviser to understand your financial situation, experience, and goals before recommending anything, to independently investigate investments rather than relying on marketing materials, and to keep monitoring your portfolio over time. This ongoing monitoring is a real functional difference from the point-of-sale approach of Reg BI.
The duty of loyalty requires the adviser not to put its interests ahead of yours. Referral fees, revenue-sharing payments from fund companies, and any other financial incentive tied to a recommendation must be fully and fairly disclosed. Disclosure alone doesn’t cure a bad recommendation, but it gives you the information to evaluate whether a conflict has compromised the advice.
How to Verify a Firm’s Fiduciary Status
Two free public databases let you confirm whether a firm or an individual is a registered investment adviser. Using both gives you the fullest picture.
Investment Adviser Public Disclosure (IAPD)
The SEC’s IAPD database at adviserinfo.sec.gov is the central repository for investment adviser registration data.7Investment Adviser Public Disclosure. IAPD Homepage To use it:
- Select the “Firm” tab on the homepage rather than “Individual.”
- Enter the firm name, or the firm’s CRD or SEC file number if you have it. The CRD (Central Registration Depository) number is a unique identifier that avoids confusion between similarly named firms.
- Choose the result labeled as an Investment Adviser Firm. If the firm also has a brokerage registration, multiple results may appear; pick the advisory listing.
- Check the registration status. It should read “Approved” or “Effective.” Anything else means the firm may not currently be authorized to provide advisory services.
- Open the linked Form ADV filings from the summary page.
If the results show a “successor” filing, the firm has been through a merger or structural change; follow the successor link to find the current entity. IAPD also cross-references FINRA’s BrokerCheck, so it will flag whether the entity has a brokerage registration as well.
FINRA BrokerCheck
BrokerCheck at brokercheck.finra.org tells you whether a person or firm is registered to sell securities, to provide investment advice, or both.8Financial Industry Regulatory Authority. BrokerCheck – Find a Broker, Investment or Financial Advisor It’s especially useful for checking individual representatives. If your financial professional is registered only as a broker-dealer representative and not as an investment adviser representative, they are operating under Reg BI rather than the fiduciary standard. That’s not automatically a problem, but it’s information you need to have.
Form CRS and Form ADV
Two disclosure documents give you the clearest window into how a firm operates, gets paid, and manages conflicts.
Form CRS is a short “relationship summary” that both investment advisers and broker-dealers must deliver to retail investors before opening an account or making a first recommendation.9U.S. Securities and Exchange Commission. Form ADV Part 3 Instructions to Form CRS An investment adviser’s Form CRS must include the statement: “When we act as your investment adviser, we have to act in your best interest and not put our interest ahead of yours.” Broker-dealers use different required language reflecting Reg BI. Reading this two-page document before signing anything is the fastest way to tell which standard applies to the advice you’ll receive.
Form ADV is the fuller registration document.10U.S. Securities and Exchange Commission. Form ADV Part 1 contains structured data on ownership, employees, client types, and disciplinary history. Part 2, called the brochure, is a plain-English narrative describing fees, investment strategies, and conflicts of interest. Advisers must deliver the brochure to prospective clients. When reviewing it, focus on the fee disclosures in Part 2 and the disciplinary history in Part 1. A firm with prior disciplinary actions isn’t necessarily one to avoid, but you should know what happened before you decide.
If a Fiduciary Falls Short
If you believe a registered investment adviser has violated its duties, you have several routes for recourse.
The SEC accepts tips, complaints, and referrals through an online portal at sec.gov. You can file anonymously through an attorney if you prefer. The form times out after 60 minutes of inactivity, so gather your documentation before you start.11U.S. Securities and Exchange Commission. Welcome to Tips, Complaints, and Referrals SEC complaints can trigger investigations and enforcement actions but don’t directly compensate you for losses.
For disputes involving dual registrants with a brokerage arm, FINRA requires arbitration when the dispute arises from the firm’s activities as a FINRA member. FINRA arbitration can result in direct monetary awards to investors.12FINRA. Guidance on Disputes Between Investors and Investment Advisers That Are Not FINRA Members For advisers that aren’t FINRA members, you may need to go through your state securities regulator or file a civil lawsuit.
Before filing anything, pull together account statements, correspondence with the adviser, the firm’s Form ADV (especially the conflict disclosures in Part 2), and any records showing how a recommendation diverged from what your situation warranted.