A fiduciary is an individual who acts in the best interests of a particular person or beneficiary. In the world of financial services, that means fiduciary advisors must only act in the best interests of their clients.
What Is a Fiduciary? and Why It Matters when Choosing a Financial Advisor
Breaking down what the fiduciary rule means for you.
Article published: September 26, 2025
Is Your Financial Advisor a Fiduciary?
If not, can you be certain they’re always putting your best interests first? Our sole focus is on helping you reach your financial goals.
In April 2024, the Department of Labor expanded regulations requiring investment advice on retirement assets to be in your best interests. While it’s not certain whether these regulations will ultimately be implemented, it doesn’t change anything about how we serve our clients.
Edelman Financial Engines has always been a fiduciary and that's not changing, ever.
WHAT IS A FIDUCIARY?
It’s an impressive-sounding word, but a “fiduciary” is just someone legally required to act in your best interests, and they pop up in a variety of circumstances. For example, if you’ve given someone power of attorney over your finances, that person is required to act as a fiduciary. An estate executor is similarly required to act as a fiduciary for the beneficiaries. Attorneys, trustees and guardians must also meet fiduciary responsibilities.
What does “best interests” mean? Fiduciaries are required to put their clients’ interests ahead of their own and have a duty to preserve good faith and trust. So, fiduciary advisors are legally and ethically bound to a code of conduct that requires they always act in their clients’ best interest.
Financial advisors may or may not be fiduciaries, so let’s talk about why we think that distinction is important.
FIDUCIARY VS. OTHER BUSINESS MODELS: WHAT’S THE DIFFERENCE?
Not all financial professionals are fiduciaries. Some – particularly, broker-dealers who are typically compensated by commissions – are only held to the Regulation Best Interest standard. This means they’re expected to act in their client’s best interest at the time of their recommendation, however, it doesn’t ensure the products they recommend are necessarily the best or most cost-effective for you.
Here’s a quick comparison:
Fiduciary Advisor | Other Business Models |
Legally required to act in your best interest at all times | Required to act in your best interest at the time of investment recommendation |
Completely independent | May be affiliated with other entities with competing priorities, products or services |
Must review and update recommendations based on client’s evolving needs | Not required to monitor or update recommendations as frequently |
Typically fee-only or fee-based | Often commission-based |
UNDERSTANDING THE DOL FIDUCIARY RULE OF 2024
So, why are you hearing more about fiduciaries in the news and TV ads?
The Department of Labor has tried for years to implement standards that protect retirement investors, including requiring investment advice providers to act as fiduciaries – in other words, to give advice that’s in your best interests, not theirs.
Their efforts came to fruition in April 2024 when the DOL finalized its Retirement Security Rule, which expanded a regulation popularly known as “the fiduciary rule,” requiring a fiduciary standard of care for investment advice on retirement assets. The update was scheduled to take effect in late September 2024, but ongoing legal challenges have halted the rule for now.
BEING A FIDUCIARY IS IMPORTANT TO US BECAUSE IT MATTERS TO YOU
Our fiduciary commitment to you is at the heart of our business. How? Edelman Financial Engines is completely independent – we’re not affiliated with a bank, insurance company or broker dealer. The only things we do are advice and management, which says a lot about who we are as an advisory firm.
We don’t manufacture any proprietary investment products – there’s no “EFE fund” to invest in – which means our advice comes free of product conflict. Since we’re not incentivized to encourage you to invest in a fund we own, we can stay focused on advising you on the investments that make the most sense for your financial objectives.
As opposed to a broker dealer who receives commissions on trades, our compensation is based on the service you receive. So, any time we recommend an investment, you can be assured that recommendation is what we think is best for you. That’s not always the case with a broker dealer, who may be incentivized to recommend proprietary products over others.
ACTING IN YOUR BEST INTEREST ISN'T NEW TO US
As a reminder, Edelman Financial Engines has always acted as a fiduciary when it comes to investment advice, and nothing will change going forward. While there are legal challenges to the new regulation working their way through the courts, and outstanding questions about how, when or if it will be applied, you can rest assured that the investment advice we give is always in your best interests. It’s not dependent on what happens with the new regulation … or not.
Our commitment to you is built on trust, not regulations. In fact, the word “fiduciary” comes from the Latin word for “trust.” The trust you’ve placed in us is sacred, and we’ll never take it for granted.
Frequently Asked Questions About Fiduciary Financial Advisors
An advisor’s business model is critical because it reveals the key attributes that may or may not enable fiduciary investment advice. At Edelman Financial Engines, our model is focused on advice and management. Others may complicate this relationship by offering ancillary products or proprietary investment funds and may even act as a commission-based broker dealer. Our model – and our commitment to doing what’s right – means when it comes to investment advice, we always act in your best interest.
We encourage all investors to ask questions that may help them gain clarity about any potential investment advisor and how they operate. We recommend taking a look at the key questions to ask, including “Are you a fiduciary?” Their answers can help you make an informed decision.
Yes, Edelman Financial Engines and our financial advisors act as a fiduciary when it comes to investment advice and investment management. This means we only make decisions based on the best interests of our clients. Not simply because it’s a legal requirement, but because it’s the right thing to do. Fiduciaries must act with a higher standard of care and we take this obligation seriously.
This material was prepared for educational purposes only. Although the information has been gathered from sources believed to be reliable, we do not guarantee its accuracy or completeness.
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