Fiduciary Advisor Filter
Screen advisers for continuous fiduciary duty and product independence.
- Difficulty
- Starter
- Time to result
- ~days to results
- Steps
- 5
- Confidence
- 94%
The Fiduciary Advisor Filter is a preliminary decision rule for reducing conflicts when choosing financial advice. The client first determines whether the adviser is legally required to act in the client’s best interest one hundred percent of the time, rather than only in selected interactions. The client then maps compensation sources, including commissions, bond spreads, and revenue sharing, because each can influence recommendations. Finally, the client checks whether the adviser or firm owns the products being recommended. Passing the filter does not prove that an adviser is skilled or honest, but it creates a more favorable alignment before the client evaluates expertise, fees, services, and personal fit. The output is a shortlist of advisers operating on the same side of the table as the client.
Origin
Extracted from Masters in Business
Core principles
- 01Legal duty matters more than reassuring language.
- 02Fiduciary responsibility should apply at all times.
- 03Commissions and revenue sharing create conflicts that require scrutiny.
- 04Proprietary products can compromise product recommendations.
- 05Aligned incentives do not guarantee competence, but they improve the starting conditions.
How to run it
- 1
Establish legal status
Ask whether the adviser is a fiduciary in every interaction and for every recommendation.
Pro tip Request a plain written statement rather than relying on verbal assurances.
Watch out An adviser may act as a fiduciary in some contexts but as a broker in others.
- 2
Map compensation
Identify fees, commissions, bond spreads, referral payments, and other ways the adviser or firm gets paid.
Pro tip Ask for examples showing how compensation changes across recommended products.
Watch out A disclosed conflict remains a conflict and still needs evaluation.
- 3
Check revenue sharing
Determine whether funds or product providers return part of their revenue to the adviser or firm.
Pro tip Ask whether an economically similar product without revenue sharing is available.
Watch out Revenue sharing can reward product placement independently of client benefit.
- 4
Test product independence
Ask whether the adviser, employer, or an affiliate owns or manufactures any recommended products.
Pro tip Request the rationale for choosing proprietary products over external alternatives.
Watch out Product ownership can create pressure to recommend the firm’s own offerings.
- 5
Evaluate the aligned shortlist
Among advisers who pass the conflict screen, compare qualifications, relevant experience, fees, services, and communication fit.
Pro tip Interview more than one qualified fiduciary before deciding.
Watch out Fiduciary status alone does not establish skill or suitability.
In the wild
A prospective client finds that one adviser can receive commissions and revenue sharing, while another accepts a continuous fiduciary obligation and does not own recommended products. The client places the second adviser on the shortlist, then compares credentials, fees, and services before hiring.
→ The client reduces avoidable incentive conflicts while preserving a broader competence review.
Common mistakes
Assuming every adviser is a fiduciary
Many clients incorrectly assume financial advisers have the same automatic best-interest duty they associate with doctors, lawyers, or accountants.
Treating honesty as the only issue
An adviser can be personally honest while operating under incentives that create structural conflicts.
Stopping after the fiduciary question
Legal alignment is a screen, not proof of expertise, fair pricing, or a suitable service model.
Is it for you?
Best for
It is best for people hiring or replacing an investment adviser and comparing firms with different compensation models.
Not ideal for
It is not sufficient by itself to establish an adviser’s competence, integrity, performance, or suitability for specialized needs.
From the transcript
“They don't have to be actor the client's best interest all the time.”
“All of those things are conflicts of interest.”
“doesn't own their own products.”
From the episode
At the Money: Keeping It Simple