Why Fiduciary Duty Isn’t Always Enough: The One Question Every Investor Must Ask

If you’ve done even a little research on how to choose a financial advisor, you’ve probably seen this advice everywhere: “Work with a fiduciary.”

It’s absolutely true. An advisor with fiduciary duty is legally required to put your best interests first. But here’s what most people don’t realize:

Some advisors, including many of the biggest and most recognizable national firms, can quietly switch in and out of fiduciary duty without telling you.

And that means you may not always be getting advice that puts you first. Let’s break down how this happens, why it matters, and how you can protect yourself.

The Hidden Fiduciary Duty “Switch” Most Investors Don’t Know Exists

Here’s the part most consumers never hear:

• All Registered Investment Advisors (RIAs) must act as fiduciaries under the Investment Advisers Act.

• But if an RIA is also licensed as a broker-dealer, they can “switch hats” and give advice under the weaker suitability standard (Reg BI), where fiduciary duty does not fully apply.

This dual-registration is extremely common among large national firms.

When an advisor switches roles, the standard of care that applies to your account changes, and the firm is not even required to tell you in plain English when the switch happens.

That means your advisor might:

• Give fiduciary advice in one part of the meeting

• Recommend a product under a non-fiduciary standard in the next

• Switch back depending on which account type or product is being discussed

To the average investor, it looks seamless. Behind the scenes, it’s not. This is where conflicts of interest can enter the picture.

Why This Matters For Your Money

When an advisor isn’t acting as a fiduciary, you lose important protections. That can affect:

• The quality of the advice you receive

• The cost of the investments you’re placed in

• Whether the recommendation truly puts you first

• Whether conflicts of interest must be avoided or merely “disclosed”

Under the weaker suitability standard, a product only needs to be “suitable,” not necessarily the best or the most cost-effective option for you.

Trust with your advisor shouldn’t depend on which license they pick up that day.

Real-Life Example:

Very recently a couple came to visit me because their previous advisor had passed away and they were seeking someone to take over their investment accounts. This couple was incredibly kind, the type that you genuinely enjoy meeting and talking with. Unfortunately, their previous advisor was not a fiduciary. He had sold them a commissionable investment years before. Not only did the advisor receive a significant commission for placing them into these securities, he also was collecting a fee each quarter for doing what amounts to nothing. In my professional opinion, the investment was not a good fit for this couple, but they had been convinced that it was. When I explained that as a fiduciary I could not recommend the commissionable products they had been sold, they were understandably disappointed. The couple asked me to become the advisor on their account, but to do it without changing any of the previous investment holdings.  Well I suppose some might consider that a nice offer, but as a fiduciary, I can not do that. It's a regulatory standard, yes, but it's also an ethical and moral standard that I won't violate. Sadly, because I couldn't offer them what they wanted, they moved on and probably will not have to look too far to find someone who is willing to just sit back and collect the fees without providing the meaningful service that they deserve. This is a real-life example of why 100% fiduciary 100% of the time matters.

The One Question Every Investor Should Ask

To protect yourself, ask this:

“Are you and your firm required to act as a fiduciary for me at all times?”

You’re looking for a clear and simple yes, without any conditions or qualifiers.

At Convergent Financial Group, "yes" is our answer.

We believe your financial life deserves 100% fiduciary care, 100% of the time.

Not some of the time.

Not depending on product lines. (We don’t even sell products.)

Not depending on account types.

Always.

To sum it up:

✔ RIA-only

✔ Fee-only

✔ Fiduciary100% of the time

How to Check Whether a Firm Is Dual-Registered Using Form ADV

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Want to verify right now whether your advisor’s firm can switch between fiduciary and non-fiduciary roles? You can check it yourself in just a few minutes.

Step 1:

Go to the SEC’s public adviser search tool at https://adviserinfo.sec.gov

Step 2: Search for the firm and/or your advisor. There's a tab at the top for each type of search, firm and advisor.

Step 3: Look for These Two Items on the ADV

Form ADV Part 1: “Are you dually registered as a broker-dealer?”

If the answer is yes, the firm can legally switch hats.

Form ADV Part 1: “Do you have related broker-dealer entities?”

This is another sign that the firm or its affiliates can operate under differing standards.

Step 4: Review “Part 2A – Brochure”

Look for language like:

• “When acting as a broker…”

• “Compensation may differ…”

• “Services provided in a brokerage capacity…”

Any of these indicates dual roles.

What It Means If a Firm Is Dual-Registered

It doesn’t automatically mean they give bad advice — but it does mean:

• They are not always required to act as a fiduciary

• They may switch between standards depending on the situation

• You must ask extra questions to understand which standard applies

What You Need to Look For

Ideally, you want a firm that is

✔ RIA-only

✔ Fee-only

✔ Fiduciary100% of the time

This structure eliminates the fiduciary “switch” entirely.

You deserve an advisor who stands with you all the way, not just when the law says they must. At Convergent Financial Group, we put client interests first — not because it’s required, but because it’s right. After all, advice is only trustworthy when it is loyal.

If you want to learn more about working with an all-the-time fiduciary, you can schedule an intro meeting here. And because we at Convergent stick to a high moral standard, even if you decide not to work with us, we will not keep calling or bothering you... we respect you and your time (and ours!) too much for that.

As always, wishing you the best!