The fiduciary rule has faced decades of debate, but its core promise remains the same: Put the client first.
What it means to be a fiduciary advisor has a long and convoluted history. The original fiduciary rule was introduced by the U.S. Department of Labor in 1975 — the same year moviegoers lined up for “Jaws.” Just as the film sparked a frenzy that had beachgoers seeing sharks everywhere, markets can also work themselves into a feeding frenzy — the kind of waters in which a fiduciary advisor would caution you to swim carefully.
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The DOL’s intentions were straightforward: protect retirement investors from conflicts of interest and require individuals overseeing retirement plans, like plan sponsors and financial advisors, to act in their clients’ best interest. While the fiduciary rule has faced repeated legal challenges and revisions — notably in 2010, 2016 and 2020 — its guiding principles have stood firm.
The word “fiduciary” also has a rich backstory. In early Roman history, when someone needed a rock-solid pledge on transferred property, a fiducia was created to bind the contract. Derived from the Latin root fidere — “to trust” — a fiduciary relationship conveys good faith, reliance and confidence. Those same values form the foundation of fiduciary advisors’ relationships with their clients today. Here’s what you need to know about how fiduciary advisors are meant to convey those principles in relationships with clients:
— What is a fiduciary advisor?
— Investors value trust over returns.
— What clients expect from their advisor.
— A key distinction.
What Is a Fiduciary Advisor?
The Investment Advisors Act of 1940 states that investment advisors have a fiduciary duty to act in their clients’ best interest. This fiduciary duty is regulated by the Securities and Exchange Commission and is characterized by two key applications summarized below:
— Duty of care. The investment advisor must, among other things, understand clients’ financial objectives and circumstances, and apply skill, diligence and prudence in support of their needs and objectives.
— Loyalty. The investment advisor must avoid any conflicts of interest and always prioritize clients’ best interests.
How can someone verify whether a financial professional is indeed a fiduciary advisor? One way is to simply ask the financial professional. Another method is to check the SEC website or look into the financial professional’s credentials; a Certified Financial Planner professional, for example, is obligated to act as a fiduciary advisor. CFP Board CEO Kevin Keller adds, “The fiduciary standard is simple but powerful: Put the client’s interests first. Not all financial advisors are held to this standard, and that’s what sets CFP professionals apart.”
There are currently more than 104,000 CFP professionals registered with the CFP Board. The CFP Board advocates for consumers’ financial interests and offers tips on how to select a financial advisor.
Investors Value Trust Over Returns
A 2025 CapIntel survey revealed trust, not portfolio performance, is the top quality investors look for in a new financial advisor. In fact, 72% of investors said trust was paramount in their decision to work with an advisor, followed by investment experience (50%) and holistic planning capabilities (46%).
On the flip side, the same survey found a breach of trust (61%) and poor performance relative to expectations (54%) were among the top reasons investors would look to replace a financial advisor.
[Read: What to Know About Financial Advisor Fees and Costs]
Many investors’ recent fascination with newer asset classes, like cryptocurrency, have also elevated the demand for trustworthy guidance. For example, while more than 1 in 5 Americans currently own cryptocurrency as an investment, many skeptical investors cite knowledge and security concerns as reasons they’re holding back now.
Courtney Holt, chief compliance officer for Compound Planning, notes, “The rise of investment vehicles such as cryptocurrency, private credit or other alternative assets can present potential opportunities for investors while also heightening the responsibilities of registered investment advisers.” She adds, “The fiduciary duty to act in a client’s best interest doesn’t change, but must be adapted to address the complexity, regulatory scrutiny and risk profiles of these increasingly popular asset classes.”
What Clients Expect From Their Advisor
When clients hire a financial advisor, they have certain expectations about the nature of that relationship. Ryan Murphy, Samantha Lamas and Ray Sin explored clients’ expectations in a 2020 Journal of Financial Planning article. From their research, they list the top qualities clients value the most in their relationship with a financial advisor:
— Helps me reach my financial goals.
— Has the relevant skills and knowledge.
— Communicates and explains financial concepts well.
— Can help me maximize my returns.
— Has a good reputation and positive reviews.
A Key Distinction
Many financial advisors of varying stripes have good intentions and want to deliver a remarkable experience for their clients. Fiduciary advisors are not unique in that regard. But the key distinction is fiduciary advisors embrace a formal, legal process to always pursue clients’ best interests, and to invest time and energy in clients’ financial priorities. After all, there’s an implied promise at stake when consumers reach out to financial advisors for help.
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What Is a Fiduciary Advisor? originally appeared on usnews.com
Update 08/27/25: This story was previously published at an earlier date and has been updated with new information.
