By Harry Prabandham · Updated September 28, 2026
Personal Finance
How to Choose a Financial Advisor: Fiduciary Duty, Fees, and Background Checks
Confirm how an advisor is regulated and paid, read the Form CRS and Form ADV, and check their record on IAPD or BrokerCheck before hiring.
How to Choose a Financial Advisor: Fiduciary Duty, Fees, and Background Checks
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How do you choose a financial advisor?
- Start with how the person is regulated: an investment adviser owes a fiduciary duty, while a broker follows Regulation Best Interest.
- Ask exactly how they're paid, since compensation is the source of most conflicts of interest.
- Read the firm's Form CRS and Form ADV Part 2, which describe services, fees, conflicts, and disciplinary history.
- Look up the firm and the individual on the SEC's IAPD site or FINRA's BrokerCheck.
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Full Guide
How do you choose a financial advisor?
- Start with how the person is regulated: an investment adviser owes a fiduciary duty, while a broker follows Regulation Best Interest.
- Ask exactly how they're paid, since compensation is the source of most conflicts of interest.
- Read the firm's Form CRS and Form ADV Part 2, which describe services, fees, conflicts, and disciplinary history.
- Look up the firm and the individual on the SEC's IAPD site or FINRA's BrokerCheck.
What's the difference between a fiduciary adviser and a broker?
- Investment advisers owe clients a fiduciary duty under the Investment Advisers Act, made up of a duty of care and a duty of loyalty.
- Broker-dealers must act in a retail customer's best interest when recommending securities under Regulation Best Interest, adopted in 2019.
- Many professionals are dually registered, so ask which capacity they're acting in for each recommendation.
- A fiduciary duty doesn't mean conflict-free; it requires full disclosure of conflicts and putting your interest first.
How are financial advisors paid?
- Asset-based fees are a percentage of the assets managed, and the SEC notes they create an incentive to encourage you to add assets.
- Hourly, flat, or retainer fees are charged for planning or advice regardless of account size.
- Commissions are paid per product or transaction, which can create an incentive to recommend particular products or more trades.
- Fee-only advisers are paid only by clients, not by product sponsors.
Which credentials are worth checking?
- The CFP certification requires education, a board exam, work experience, and adherence to CFP Board ethics standards.
- The CFA charter focuses on investment analysis and portfolio management and requires passing three exam levels.
- Designations vary widely in rigor, and FINRA maintains a database describing what each one requires.
- A credential isn't a license; registration with the SEC, a state, or FINRA is what permits someone to give advice or sell securities.
What questions are worth asking before you hire someone?
- Are you acting as a fiduciary for all of our work together, and will you put that in writing?
- How are you and your firm paid, including any commissions, referral fees, or revenue sharing?
- What services does the fee include, and what costs extra?
- Who holds my assets, and who can move money out of my accounts?
What red flags deserve a closer look?
- Promises of specific returns, or claims that an investment carries little or no risk.
- Vague answers about fees, pressure to act quickly, or reluctance to put terms in writing.
- Complex products recommended without a clear explanation of their costs and risks.
- Disciplinary events on IAPD or BrokerCheck, which are worth reading in full.
Key takeaways
- Know whether you're dealing with a fiduciary adviser, a broker, or someone acting as both.
- Understand every way the advisor is paid and the conflicts each creates.
- Form CRS, Form ADV, IAPD, and BrokerCheck are free and public.
- Rubric Advisors is a fee-only registered investment adviser; its Form ADV and Form CRS are linked in the site footer.
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