Fiduciary vs suitability, how advisors get paid, and when you actually need one.
A fiduciary is legally required to act in your best interest. A suitability standard (what most brokers and insurance agents operate under) only requires recommendations to be "suitable" — a lower bar. Ask any advisor in writing: "Are you a fiduciary 100% of the time?" If the answer is anything other than yes, you know what you're dealing with.
Fee-only advisors charge you directly — flat fee, hourly, or percentage of assets. Commission-based advisors earn from the products they sell you (mutual funds with loads, annuities, insurance). Fee-based advisors do both. The incentive differences are real: a commission-based advisor is never punished for recommending a high-commission product over a low-cost one.
You don't need an advisor to max a 401(k), buy index funds, or open an IRA. You might benefit from one when decisions get complex: Roth conversion strategy, Social Security claiming, pension lump sum vs annuity, business sale planning, estate planning with a blended family. The value isn't in picking investments — it's in navigating decisions where the tax code and human psychology intersect.
Are you a fiduciary 100% of the time? How do you get paid — all sources? Do you have any disciplinary history (check BrokerCheck.finra.org)? What's your typical client? Who holds my money (custodian should be an independent firm like Fidelity or Schwab, not the advisor)? Can I see a sample financial plan? These five questions filter out 90% of problematic relationships.