Investor Education
Independent Fiduciary Advisor vs. Broker: What Every Investor Should Know
The difference between a fiduciary financial advisor and a broker comes down to one word: obligation. A fiduciary advisor is generally required by law to act in your best interest at all times. A broker is typically held to a "best interest" standard at the point of a transaction, which is a different, and in most cases more limited, legal threshold. Understanding this distinction may be one of the most important steps you take before selecting a financial professional.
The Two Models Defined
What Is a Fiduciary Financial Advisor?
A fiduciary financial advisor is a financial professional, typically a Registered Investment Adviser (RIA) registered with the SEC or a state securities regulator, who is legally obligated to prioritize a client's best interests above their own. This standard originates from the Investment Advisers Act of 1940 and applies on an ongoing basis, not just at the time of a single transaction.
In practice, a fiduciary duty generally means the advisor must:
- 1 Disclose material conflicts of interest in writing, typically via Form ADV
- 2 Provide advice that prioritizes the client's goals over the advisor's compensation
- 3 Maintain ongoing suitability, not just transactional suitability
- 4 Seek best execution for client transactions where applicable
Important note: a fiduciary standard does not eliminate all conflicts of interest. Conflicts may still exist and should be evaluated individually. The standard requires disclosure and management of those conflicts, not their absence.
What Is a Broker?
A broker, or broker-dealer representative, is a licensed financial professional registered with FINRA who is authorized to buy and sell securities on behalf of clients. Brokers are primarily compensated through commissions on transactions, though fee-based arrangements also exist at many broker-dealer firms.
Since June 2020, brokers have been subject to the SEC's Regulation Best Interest (Reg BI), which requires that recommendations be in the client's best interest at the time of the recommendation. However, Reg BI generally does not impose the same ongoing, relationship-wide obligation that applies to RIAs under the fiduciary standard.
Brokers may offer access to a wide range of products, including proprietary products from their parent firm. They are required to disclose conflicts of interest and compensation arrangements under Reg BI's disclosure obligations, but the enforcement and scope of this standard differs from the investment adviser fiduciary duty.
Quick Check
To verify any financial professional's registration, disciplinary history, and credentials, use FINRA BrokerCheck (brokercheck.finra.org) or the SEC's IAPD database (adviserinfo.sec.gov). Both are free, public tools.
Side-by-Side Comparison
Fiduciary Advisor vs. Broker: Key Differences
The table below summarizes how these two models typically differ across five dimensions that matter most to investors. Individual firms and arrangements may vary.
| Dimension | Fiduciary Advisor (RIA) | Broker (Broker-Dealer Rep) |
|---|---|---|
| Legal Standard | Fiduciary duty — generally must act in client's best interest on an ongoing basis under the Investment Advisers Act of 1940 | Regulation Best Interest (Reg BI) — must make recommendations in the client's best interest at the time of the recommendation |
| Compensation Structure | Typically fee-based (AUM percentage, flat retainer, or hourly); some RIAs may also earn commissions in certain arrangements — check Form ADV | Often commission-based on products sold; fee-based models also exist at many broker-dealer firms |
| Conflict of Interest Disclosure | Required to disclose material conflicts via Form ADV; conflicts must be managed or avoided — but conflicts may still exist | Required to disclose conflicts under Reg BI's Form CRS; scope and management of disclosed conflicts may differ from the RIA standard |
| Product Access | Typically broader open-architecture access; not limited to proprietary products in most independent RIA structures | May have access to a wide product range, though proprietary or preferred products may be recommended more frequently at some firms |
| Client Obligation Scope | Ongoing advisory relationship; advisor is generally expected to monitor and update recommendations as the client's situation changes | Obligation typically attaches to each individual recommendation, not necessarily the ongoing relationship unless a specific advisory agreement is in place |
Sources: Investment Advisers Act of 1940; SEC Regulation Best Interest (effective June 2020); SEC Form ADV disclosure requirements. Table reflects general regulatory frameworks as of 2026 — individual firm structures may vary.
Decision Framework
When Each Model May Make Sense
Neither model is universally better for every investor. The right choice depends on whether you need comprehensive wealth management or simpler brokerage services, how complex your financial situation is, and how much ongoing guidance you expect. Use the framework below to think through where you may fit.
A fiduciary RIA model may be worth exploring if your financial situation involves multiple moving parts, such as coordinating investment strategy with retirement income distribution planning, tax planning, and estate considerations over time. Professionals seeking ongoing financial clarity often find that a comprehensive, ongoing advisory relationship aligns more naturally with a fiduciary framework than a transaction-based brokerage model.
A broker-dealer arrangement may be sufficient for investors with straightforward, transactional needs, such as executing specific trades, purchasing particular insurance products, or accessing securities not available through an RIA platform. The broker model may also involve lower minimum account thresholds at some firms.
Note: Some professionals hold both RIA registration and broker-dealer licenses, which means they may operate under different standards depending on the services provided. Always clarify which capacity your advisor is acting in for each service.
Consider a Fiduciary RIA if:
- 1 You want an ongoing advisory relationship, not just transactional guidance
- 2 Your financial situation involves retirement planning, tax strategy, and estate coordination working together
- 3 You want your advisor's compensation to be transparent and documented in a public filing (Form ADV)
- 4 You're approaching a major financial transition, such as retirement, a business exit, or a liquidity event
A Broker May Be Sufficient if:
- 1 You have a specific, one-time transaction to execute and do not require ongoing planning
- 2 You prefer to self-manage your finances and only need periodic product access
- 3 The specific products or securities you need are only available through a licensed broker-dealer
Due Diligence
Questions to Ask Any Financial Professional Before Hiring
Whether you are evaluating a fiduciary advisor or a broker, understanding the right questions to ask any financial professional can help you evaluate the relationship before you commit. A credible professional should answer each one clearly and in writing. You may also want to understand: What Is the Difference Between a Financial Advisor and a Fiduciary Advisor?
Are You a Fiduciary at All Times?
Some advisors operate as a fiduciary in certain capacities but not others. Ask whether the fiduciary standard applies to every service and recommendation they provide, and request written confirmation.
How Are You Compensated?
Ask for a full breakdown of all compensation: advisory fees, commissions, referral fees, and any revenue-sharing arrangements. Compensation structures that rely on product sales may create different incentives than fee-only arrangements. You can also explore what a fee-only advisory relationship looks like before making any decisions.
What Conflicts of Interest Exist?
Request Form ADV (for RIAs) or Form CRS (for broker-dealer reps) and ask the advisor to walk through any disclosed conflicts. Every professional may have some conflicts; transparency in disclosing and managing them is what matters.
What Are Your Credentials and Registration?
Ask for license numbers and verify them independently through FINRA BrokerCheck and the SEC's IAPD. Look for relevant credentials such as FINRA Series 65 or Series 66 registrations, which are typically required for investment advisory representatives.
What Does the Ongoing Relationship Look Like?
Understand how often you will meet, who you will work with directly, and how your plan will be reviewed as your circumstances change. Advisory relationships that evolve with your life may provide more continuity than transaction-based arrangements.
Do You Build a Strategy Before Making Recommendations?
Ask whether the advisor starts with a comprehensive financial strategy, or whether they begin with product recommendations. A strategy-first approach typically leads to recommendations that are more directly tied to your goals, rather than to available products.
Our Approach
How New Horizons Boutique Financial Services Operates
New Horizons Boutique Financial Services is a registered investment advisory firm based in Lake Elmo, MN, serving professionals and families across the Twin Cities metro and surrounding communities. If you are looking for a fiduciary financial advisor in the east Twin Cities, including Stillwater, Woodbury, and the surrounding area, our team works directly with clients throughout this region.
Our team holds FINRA Series 7, 63, 65, and 66 registrations, along with Life and Health Insurance licenses. Lars Engman holds an MBA, and Alec Engman holds a B.S. in Economics from the University of Minnesota. Every client relationship begins with a comprehensive financial strategy before any specific recommendations are made.
We intentionally limit our client count so that every relationship receives consistent attention. Clients work directly with their advisor, not through rotating associates or call centers. Our approach covers investments, tax planning, retirement income strategy, cash flow, insurance, and estate coordination as a single, integrated plan. Executives approaching a career transition can also explore our executive financial planning resources for the Twin Cities for guidance specific to deferred compensation, stock options, and retirement timing.
As with any advisory firm, conflicts of interest may exist and are disclosed in our Form ADV, available through the SEC's IAPD database. We encourage all prospective clients to review it prior to engaging our services.
Strategy Before Products
Every engagement begins with a full financial strategy. Recommendations follow the strategy, not the other way around. This means the first question is always: what are your goals? Not: what products should you own?
Boutique by Design
We intentionally limit the number of clients we serve. This is not a scalability constraint; it is a deliberate practice decision designed to ensure every client receives the time and attention their situation deserves.
Education and Transparency
Clients are kept fully informed about the strategies shaping their financial plan. Our goal is for clients to understand what is being done and why, so that financial decisions can be made from a position of clarity, not uncertainty.
Common Questions
Frequently Asked Questions
Answers to the questions investors most commonly ask when comparing fiduciary advisors and brokers.
What Is a Fiduciary Duty in Financial Planning?
A fiduciary duty in financial planning is a legal obligation that requires an advisor to act in the client's best interest at all times. Registered Investment Advisers (RIAs) are generally held to this standard under the Investment Advisers Act of 1940. In practice, this means an advisor must prioritize the client's financial goals above their own compensation and must disclose material conflicts of interest. The standard applies on an ongoing basis, not just at the moment of a specific transaction. For a deeper explanation of how this works in practice, see our guide on what a fiduciary financial advisor is and what to expect from the relationship.
Is a Broker Held to a Fiduciary Standard?
Generally, no. Brokers registered with FINRA are typically held to the "best interest" standard under Regulation Best Interest (Reg BI), which requires recommendations to be in the client's best interest at the time of the transaction. This is a different, and generally more limited, standard than the ongoing fiduciary duty applicable to RIAs. Reg BI does not require brokers to continuously monitor accounts or place client interests above their own compensation in the same manner as the investment adviser fiduciary standard.
What Is the Downside of Working with a Fiduciary Advisor?
Fiduciary advisors are not without limitations. Some may have higher minimum account requirements or advisory fees than brokerage alternatives. The fiduciary standard also does not guarantee competence, and it does not eliminate all conflicts of interest, only the requirement to disclose and manage them. Additionally, some RIA firms may have a narrower product shelf than large broker-dealers. As with any professional relationship, due diligence, including reviewing Form ADV and verifying credentials independently, remains important.
How Do I Find a Fiduciary Financial Advisor Near Me?
You can search the SEC's Investment Adviser Public Disclosure database (adviserinfo.sec.gov) to find registered RIAs and review their Form ADV filings. FINRA BrokerCheck (brokercheck.finra.org) allows you to verify any financial professional's licenses and disciplinary history. When evaluating a specific advisor, ask directly: "Are you a fiduciary at all times?" and request written confirmation. New Horizons Boutique Financial Services serves clients as a fiduciary financial advisor in the east Twin Cities, including Lake Elmo, Stillwater, and Woodbury. You can also explore our financial advisor services in Woodbury, MN if you are based in the south metro.
What Is the Average Fee for a Fiduciary Financial Advisor?
Fee structures for fiduciary financial advisors vary widely by firm and service scope. Common arrangements include a percentage of assets under management (AUM), which typically ranges from approximately 0.5% to 1.5% annually depending on account size; flat annual retainer fees, which may range from a few thousand dollars to significantly more depending on complexity; or hourly planning fees. Some firms combine structures. All compensation arrangements for registered investment advisers must be disclosed in Form ADV Part 2, which is publicly available through the SEC's IAPD database. Fee ranges noted here are general approximations as of 2026 and do not represent the fees of any specific firm.
Get Clarity on Your Options
Ready to Speak with a Fiduciary Advisor?
New Horizons Boutique Financial Services offers a no-cost, no-pressure initial conversation for professionals who want to understand where they stand and what a strategy-first advisory relationship could look like. There is no obligation after a first meeting.