Are Fiduciaries Really Fiduciaries in the Financial Industry

Last Friday, the Wall Street Journal’s Jason Zweig wrote a timely article on the fact that many “fiduciaries” in the financial industry are not really acting as fiduciaries, meaning not acting in the best interest of their clients despite the claim they do so, which you can read here.

Zweig, in his column, defines fiduciary as “someone who must put your interests ahead of his or her own. That means acting prudently, revealing all relevant information, eliminating as many conflicts of interest as possible, and disclosing any conflicts that remain.”


For years now, Vernon Litigation Group has been highlighting this problem in speeches to both investors and true fiduciaries in the accounting and legal field. It is troubling that, like many other things, the investment world is now regularly using the term “fiduciary” as a marketing tool rather than a standard by which to conduct activities.

Typically, Registered Investment Advisors are more likely to act as fiduciaries than brokerage firms financial advisors and insurance salesman. However, as discussed below, these broad categories are not the end of the inquiry.


To better separate true fiduciaries from those using the term fiduciary as a marketing tool, be careful of the small print in the documentation you are asked to sign when you consider hiring an investment professional who claims to follow fiduciary standards. Many financial firms create exceptions in the paperwork to allow them to sell high commission products outside of their fiduciary role, which we at Vernon Litigation Group find to be troubling. These high commission products often serve the interests of the investment professional, not the best interests of the investor. One warning sign of this self-serving activity involves the use of the phrase “Fee-Based” rather than “Fee-Only” in terms of how you are charged by your financial advisor. “Fee-Based” investment professionals should be avoided because it often means you will be charged both fees and, on certain products, commissions as well. In contrast, a “Fee-only” advisor should not receive commissions on any products.


At Vernon Litigation Group, we also agree with Zweig’s advice to determine whether a financial planner will truly be your fiduciary: “Ask whether the adviser gets compensated by anyone but you, and why. Request a written commitment to act as a fiduciary. Ask him to tell you about three conflicts of interest that might arise; if he tells you he doesn’t have any, put your hand on your wallet and leave immediately. Whether he’s called a fiduciary or not, that’s someone who’s either fooling himself or trying to fool you.”

About Vernon Litigation

Vernon Litigation Group is a law firm that represents clients in courtroom litigation, arbitration, mediation, and regulatory matters throughout the United States. Our lawyers have collectively represented thousands of investors in FINRA and other securities arbitration and litigation claims nationwide and recovered many millions of dollars from purported financial professionals and financial institutions, both large and small. Please contact us to discuss your rights if you believe a Wall Street firm or other investment firm has failed to act in your best interests or otherwise abused your trust.

For more information, visit our website at or contact Vernon Litigation Group by phone: (239) 319-4434 or by e-mail at to speak with Vernon Litigation Group.