Fiduciary vs. Salesperson: What Retirement Savers Need to Understand 

The Department of Labor passed a rule in 2024 to require more financial professionals to act as fiduciaries. That rule has now been struck down in federal court.

So what does that actually mean for you?

It means you cannot assume the advice you are receiving is required to be in your best interest.

Under that rule, more professionals would have been held to a fiduciary standard. Without it, many interactions fall back to a lower bar.

In practical terms, that means recommendations can be driven by what is acceptable, not necessarily what is best for you.

That distinction becomes more important as you get closer to retirement. It affects how you draw income, manage taxes, evaluate insurance, and structure your investments.

The standard your advisor is held to directly shapes how those decisions are made.

What Does It Mean to Be a Fiduciary?

A fiduciary is required to act in your best interest when giving advice.

That includes:

• Putting your outcome ahead of their compensation
• Avoiding or properly managing conflicts of interest
• Making recommendations that fit your overall financial plan

Not all financial professionals are required to meet that standard at all times.

For example, someone may act as a fiduciary when building your financial plan, but not when recommending an insurance policy or annuity. In those moments, they may be operating as a salesperson rather than an advisor.

In those situations, they operate under a suitability standard.

That means the recommendation has to be acceptable, not the best option available.

The Real Distinction: Advice vs. Product-Based Models

A common planning mistake is assuming all financial advice works the same way.

It does not.

There are two broad ways financial professionals are compensated:

• You pay directly for advice
• Compensation is tied to a product being implemented

In the second model, advice and implementation are often connected.

That creates a natural tension. When compensation is tied to a product, the focus can shift toward that product instead of your full financial picture.

We often see situations where a product works on its own but does not fit well within a broader strategy. Some products can also be restrictive and limit flexibility later, especially when your situation changes.

Why Acting as a Fiduciary Matters Regardless of Compensation

This is where the real issue sits.

The question is not whether someone is paid a fee or a commission.

The question is whether they are required to act in your best interest when giving advice.

A commission-based professional can act in your best interest.
A fee-based professional can still have conflicts.

The difference is the standard they are held to.

When someone is required to act as a fiduciary, the expectation is clear.
The recommendation must be built around your financial plan, not how they are paid.

If that requirement is not in place, you are left evaluating whether the advice is truly aligned.

The problem is that you are going to a financial professional specifically to avoid having to figure that out on your own.

If the person you are relying on is not required to act in your best interest, you are not getting the full value of professional advice.

Why Disclosure Alone Falls Short

Disclosure is the primary way conflicts are addressed.

A professional can explain that they are not acting as a fiduciary in a specific situation. From a regulatory standpoint, that satisfies the requirement.

But disclosure does not change how advice is delivered.

You are still relying on that person to guide important financial decisions.

The limitation is simple. Disclosure tells you a conflict exists. It does not ensure the recommendation is aligned with your best interest.

The “Two Hats” Problem

In practice, some professionals operate in multiple roles.

At one moment, they are giving you financial planning advice.
At the next, they are recommending a product that pays them a commission.

Those roles can be explained.

But that is not how most people experience it.

You are not evaluating two separate roles. You are evaluating one person.

Once trust is established, that trust carries across every recommendation, regardless of how it is labeled.

Why This Matters More for Retirement Planning

This becomes more important as you approach retirement and start making decisions that are difficult to reverse.

Retirement planning includes:

• Social Security timing
• Tax strategy
• Investment allocation
• Withdrawal sequencing
• Insurance decisions
• Estate planning

These decisions are connected.

A recommendation in one area can affect everything else.

If a recommendation is shaped by a product rather than a coordinated plan, it can influence the entire outcome.

Common Misconceptions

“All financial advisors are fiduciaries”

They are not. The standard depends on how they are licensed and what role they are operating in at the time.

“Fee-based means fiduciary”

Not necessarily. How someone is paid and the standard they are held to are not the same thing.

“Disclosure solves the problem”

Disclosure explains conflicts. It does not eliminate them or ensure you fully understand them.

What to Look For in an Advisor

If your goal is objective retirement planning advice, consider asking:

• Are you required to act as a fiduciary at all times
• How are you compensated
• Do you sell financial products directly
• How do you handle conflicts of interest
• Is advice clearly separated from implementation

Clarity in these areas helps you understand how recommendations are being made.

Key Takeaways

• Not all financial advice is held to the same standard
• The most important question is whether your advisor is required to act in your best interest
• Advice and product recommendations are often connected
• Compensation matters, but the standard of care matters more
• Disclosure alone does not ensure alignment

FAQ

What is a fiduciary financial advisor?

A fiduciary financial advisor is required to act in your best interest when giving advice.

Are all advisors required to be fiduciaries?

No. Some operate under a suitability standard depending on their role and licensing.

What was the goal of the DOL fiduciary rule?

To expand when financial professionals must act as fiduciaries when giving retirement advice.

Can a commission-based advisor still act in my best interest?

Yes. The difference is whether they are required to do so.

How do I know if my advisor is acting as a fiduciary?

Ask whether they are required to act as a fiduciary at all times and how they handle conflicts of interest.