Understanding Fiduciary Duty: What It Means for Your Financial Advisor

The Fiduciary Standard

When selecting a financial advisor, one of the most important questions to ask is: “Are you a fiduciary?” The answer has significant implications for the advice you receive and the fees you pay.

Fiduciary vs. Suitability

Fiduciary Standard (RIA firms like Meridian):

• Must act in the client’s best interest at all times
• Must disclose all conflicts of interest
• Must disclose all compensation arrangements
• Cannot receive hidden commissions or revenue-sharing payments

Suitability Standard (broker-dealers):

• Must recommend investments that are “suitable” for the client
• Suitable does not mean optimal or lowest cost
• May receive commissions and revenue-sharing payments
• Conflicts of interest may exist but need only be disclosed in fine print

Why It Matters

Consider this example: A client with $1 million to invest approaches two different advisors.

Advisor A (fiduciary) recommends a diversified portfolio of low-cost index funds and ETFs with an all-in cost of 0.30% per year, plus the advisor’s 0.95% management fee. Total annual cost: approximately $12,500.

Advisor B (suitability) recommends a portfolio of proprietary mutual funds with an average expense ratio of 1.25%, plus various account fees. The advisor receives a 1% upfront commission and 0.25% trailing commission. Total first-year cost: approximately $22,500.

Both recommendations may be “suitable,” but only one is truly in the client’s best interest.

How Meridian Upholds Fiduciary Duty

At Meridian Wealth Advisors:

• We are registered as an investment adviser with the SEC, legally binding us to the fiduciary standard
• We operate on a fee-only basis — no commissions, no revenue sharing, no hidden compensation
• We disclose all fees and potential conflicts in our Form ADV
• Our investment committee selects securities based solely on client suitability and cost-effectiveness
• Every advisor signs our internal fiduciary pledge annually

Questions to Ask Any Financial Advisor

1. Are you a registered investment adviser (RIA) or a broker-dealer representative?
2. Do you receive any compensation other than the fees I pay directly?
3. Will you provide your Form ADV Part 2A for my review?
4. Do you have any conflicts of interest related to the products you recommend?
5. Are you willing to sign a fiduciary oath in writing?

At Meridian, we welcome these questions and are proud to answer yes to every one.