What is a Fiduciary?

There are two types of Financial Advisors offering services to the public. The majority are essentially Brokers who receive commissions for the sale of investment products. These individuals are held to a Suitability Rule by their regulators, meaning they should only sell you investments that are suitable or consistent with your financial goal. In contrast, a minority of Advisors actually function as true Investment Advisors. Investment Advisors are held to a higher Fiduciary Standard as defined by the Investment Advisors Act of 1940.

Analogous to a doctor’s Hippocratic Oath, the Fiduciary Standard holds the Investment Advisor to a much higher ethical standard:  the commitment to act only in your best interest.  To do so, the Investment Advisor must adhere to the duties of loyalty and care.

So, how does one know if their Financial Advisor is a Broker or an Investment Advisor?  The easy way is to ask about credentials.  If the Advisor has a CFP® certification, you are on the right track, for CFP® practitioners must adhere to the Certified Financial Planning Board’s Code of Ethics and Professional Responsibility.   This entails adherence to the highest principles and standards, which includes the Fiduciary Standard.

The following table summarizes the differences between Advisors who act as Brokers versus those who act as Investment Advisors:

Advisor Type

Regulatory Oversight

Standard Followed

Acts as a Fiduciary?

Revenue Received

Must put investor’s interests first?

Must Disclose Conflicts of Interest?

Investment Advisor

Individual States or SEC

Fiduciary Standard


Fees for service provided





Suitability Rule


Commissions from investment or brokerage firms




Click here to view a short cartoon on the Fiduciary Standard!

Financial Planning, Investment Advisory, and Wealth Management Services offered through Willamette Financial Advisors, LLC, an independent Registered Investment Advisor with the United States Securities and Exchange Commission (SEC).  This registration does not constitute an endorsement of Willamette Financial Advisors by the SEC, nor does it indicate that the Advisor has attained a particular skill or ability. • 5335 SW Meadows Road, Suite 240, Lake Oswego, OR 97035 • (503) 747-0306.


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