Choosing an advisor: fiduciary duty, credentials, and how to check a record

Choosing who to work with is one of the most consequential financial decisions you'll make, and it's also where it's easiest to be sold to. A few direct questions and two free lookups go a long way.

Fiduciary, best interest, and suitability

Registered investment advisers (RIAs), regulated by the SEC or state regulators, owe their clients a fiduciary duty: acting in the client's best interest throughout the relationship and disclosing conflicts of interest.

Broker-dealers were historically held to a suitability standard, meaning a recommendation had to be appropriate for you, not necessarily the best option. Since 2020, the SEC's Regulation Best Interest has required brokers to act in a customer's best interest when making a recommendation, but it doesn't create the same ongoing duty of loyalty that applies to advisers. Some professionals are both, depending on the service. It's worth asking directly: are you acting as a fiduciary for everything you recommend to me?

How to check anyone's record

• SEC Investment Adviser Public Disclosure: look up an adviser or firm's registration, disciplinary history, and Form ADV, which discloses fees and conflicts of interest.
• FINRA BrokerCheck: look up a broker's licenses, employment history, and disciplinary record.

Both are free and take a few minutes. It's a reasonable step before any first meeting.

Questions worth asking

• How are you paid, and does your firm earn money from my account in any other way?
• Have you worked with people holding equity compensation, and on what kinds of decisions?
• Who else will work on my account, and how do you coordinate with tax and legal professionals?
• What credentials do you hold? Examples include the CFP® certification for financial planning and the CPA license for tax.

The order most people build a team in

1. A tax professional who works with equity compensation, because near-term tax decisions are usually the most time-sensitive
2. A wealth advisor for broader planning, diversification, and investing
3. An estate attorney, once your assets and family situation call for one

Not everyone needs all three at once.

Location matters less than it used to

Most wealth and tax relationships now run largely over video, with secure document sharing and electronic signatures. Fit, expertise, and trust matter more than whether an office is nearby.

A note on family offices

You may hear about family offices. A single-family office is a dedicated team serving one family and is commonly considered cost-effective only at very high asset levels, often cited as $100 million to $250 million or more. A multi-family office shares a team across several families and is often cited as starting around $25 million. Most people, even after a very successful liquidity event, don't need either right away.