Investor Education
Fiduciary vs. financial advisor: what the difference actually means.
"Financial advisor" is a general job title, not a legal standard. The standard that applies to your relationship depends on how the person and their firm are registered. This guide explains the distinction and how to confirm it yourself.
GateKeeper Investment Advisers, LLC is an advisory practice / DBA of investment adviser representatives of Royal Fund Management, LLC, an SEC-registered investment adviser. Advisory services are offered only through Royal Fund Management, LLC.
Two different rulebooks
An Investment Adviser Representative works through a registered investment adviser and owes clients a fiduciary duty — a duty of care and a duty of loyalty that runs throughout the relationship. That includes making recommendations in the client's best interest and disclosing material conflicts of interest.
A registered representative of a broker-dealer is generally held to Regulation Best Interest. Reg BI raised the older suitability bar and requires recommendations to be in the retail customer's best interest at the time they are made, but it attaches to the recommendation rather than to an ongoing advisory relationship.
Neither model is inherently right for every investor. The practical question is which standard applies to your account, how the person is paid, and whether both of those are disclosed clearly.
Side-by-side comparison
| Dimension | Investment adviser (fiduciary) | Broker-dealer representative |
|---|---|---|
| Governing standard | Fiduciary duty under the Investment Advisers Act of 1940 | Regulation Best Interest (Reg BI), FINRA suitability rules |
| When the standard applies | Throughout the ongoing advisory relationship | At the time a specific recommendation is made |
| Typical compensation | Fees paid by the client (asset-based, flat, or hourly) | Commissions, sales loads, or third-party compensation |
| Conflict handling | Eliminate or fully disclose material conflicts | Disclose and mitigate identified conflicts |
| Primary disclosure documents | Form ADV Part 2A and Form CRS | Form CRS and product prospectuses |
| Where to verify | adviserinfo.sec.gov (IAPD) | brokercheck.finra.org |
How to verify an advisor's fiduciary status
- 1
Search the adviser registration record
Look up the firm and the individual on the SEC's Investment Adviser Public Disclosure site (adviserinfo.sec.gov). The record shows registration status, states of notice filing, and any disclosure events.
- 2
Check BrokerCheck as well
Some professionals are registered both as an Investment Adviser Representative and as a registered representative of a broker-dealer. BrokerCheck (brokercheck.finra.org) shows which hats a person wears.
- 3
Read Form ADV Part 2A
Part 2A describes services, fee schedules, and conflicts of interest in narrative form. The fee and conflicts sections are the two most useful pages for most investors.
- 4
Read Form CRS
The Client Relationship Summary is a short document that states whether the firm is an investment adviser, a broker-dealer, or both, and lists conversation starters you can ask directly.
- 5
Ask for it in writing
Ask whether the advisor acts as a fiduciary at all times with respect to your account, and how they are compensated for each recommendation. A written answer is reasonable to request.
Questions worth asking
- Do you act as a fiduciary with respect to my account at all times?
- How are you compensated, and does that change based on what I buy?
- Are you registered as an investment adviser representative, a registered representative, or both?
- What conflicts of interest apply to the recommendations you make to me?
- Where can I read your Form ADV Part 2A and Form CRS?
Where GateKeeper fits
GateKeeper Investment Advisers, LLC is an advisory practice / DBA of investment adviser representatives of Royal Fund Management, LLC, an SEC-registered investment adviser. Advisory services are offered only through Royal Fund Management, LLC. GateKeeper Investment Advisers, LLC is not separately registered with the SEC as an investment adviser. Our regulatory documents, including Form ADV Part 2A and Form CRS, are available on the disclosures page so you can review them before any conversation.
This guide is educational and general in nature. It is not investment, legal, or tax advice, and it does not describe the standard of care applicable to any particular firm other than as generally described above.