What is a fiduciary financial advisor?

A fiduciary financial advisor is a Registered Investment Adviser (RIA) or Investment Adviser Representative (IAR) who is legally required to act in their client's best interest at all times. This obligation is ongoing and continuous — not limited to a single transaction. Fiduciary advisors are governed by the Investment Advisers Act of 1940 and must disclose and manage conflicts of interest.

What is the difference between a fiduciary advisor and a broker?

A fiduciary advisor is held to a continuous duty of loyalty and care that requires placing the client's interests above their own in all aspects of the advisory relationship. A broker operates under Regulation Best Interest (Reg BI), which requires acting in the client's best interest at the point a recommendation is made — but does not impose the same ongoing obligation. Compensation structures also differ: many brokers earn commissions on products sold, while fee-based fiduciary advisors charge clients directly.

Are all financial advisors in Indiana fiduciaries?

No. In Indiana and across the United States, not all financial professionals who use the title 'financial advisor' or 'wealth manager' are legally required to act as fiduciaries. Only Registered Investment Advisers (RIAs) and their Investment Adviser Representatives are held to the fiduciary standard under the Investment Advisers Act of 1940. Broker-dealers and their registered representatives operate under Regulation Best Interest (Reg BI), which is a different and more limited standard.

How can I verify if my financial advisor is a fiduciary?

You can verify an advisor's registration and status using two free government tools: the SEC's Investment Adviser Public Disclosure database at adviserinfo.sec.gov, and FINRA BrokerCheck at brokercheck.finra.org. You can also ask your advisor directly whether they are a Registered Investment Adviser operating under a fiduciary standard, and request that they confirm this in writing in your engagement agreement.

What is Regulation Best Interest (Reg BI)?

Regulation Best Interest (Reg BI), adopted by the SEC in 2020, requires broker-dealers to act in the best interest of their retail clients when making investment recommendations. It raised the standard from the previous 'suitability' requirement but differs from the fiduciary standard in that it applies at the point of recommendation rather than on an ongoing basis throughout the advisory relationship.

What is a fee-based fiduciary advisor?

A fee-based fiduciary advisor charges clients directly for financial advice — typically as a percentage of assets managed, a flat fee, or an hourly rate — rather than earning commissions on financial products. This compensation structure helps reduce conflicts of interest by aligning the advisor's income with the client's financial outcomes. Fee-based advisors who are also registered as Investment Adviser Representatives are held to the fiduciary standard.

What is a fiduciary financial advisor, and is Patten Financial Group one?

Yes — as fiduciaries through our affiliation with Redhawk Wealth Advisors, Inc. (an SEC-registered Investment Adviser), we are legally required to act in your best interest at all times. We put your interests above our own, avoid conflicts of interest, disclose any potential issues, and provide accurate, thorough advice.

How do you get paid, and are you fee-only?

We operate as a fee-based fiduciary firm with transparent compensation focused on your success. This structure helps minimize conflicts and aligns our interests with yours, so you always know how and what you're being charged.

I'm not happy with my current financial advisor or wirehouse. How do I know if it's time to switch?

Common signs include: you rarely hear from your advisor outside of account statements, you're not sure exactly what you're being charged or why, your portfolio hasn't been reviewed against your current goals in over a year, you've been passed between different advisors at the same firm, or you feel like a number rather than a relationship. If any of that sounds familiar, a complimentary second-opinion conversation can help you see where you stand — with no obligation to move anything.

What's the difference between a fiduciary advisor and a wirehouse broker?

A fiduciary is legally required to act in your best interest at all times. Many wirehouse brokers, by contrast, are held only to a 'suitability' standard, meaning a recommendation only has to be reasonable for your general situation — not necessarily the best available option — and may be influenced by commissions or proprietary products. As fiduciaries, we don't have that conflict: our recommendations are based on what's best for you, and our fees are transparent.

Do you work with high-net-worth individuals, executives, and business owners?

Yes. A significant part of our practice is dedicated to executives, business owners, and pre-retirees and retirees with more complex financial pictures — including concentrated stock positions, equity compensation, business succession and exit planning, tax strategy, and estate planning coordination alongside retirement income planning.

Is switching financial advisors complicated?

It's more straightforward than most people expect. In most cases, assets transfer directly between custodians without you needing to liquidate anything, and we handle the paperwork alongside you. We'll walk you through exactly what to expect before you decide to move forward.

How a Fiduciary Advisor Differs from a Broker in Indiana

Apr 23

Written By Aaron Patten

When you sit down with a financial professional to talk about your retirement, you’re trusting that person with one of the most important decisions of your life. But here’s something many Indiana pre-retirees don’t realize: not every financial professional who calls themselves an “advisor” is legally required to act in your best interest.

The distinction between a fiduciary advisor and a broker matters — and understanding it before you choose who guides your retirement plan could be one of the most important financial decisions you make.

This article explains how these two types of professionals differ, what the regulatory standards actually require, and what questions you should ask before entering any advisory relationship in Indiana.

Two Different Titles, Two Different Legal Standards

The financial services industry is home to a wide variety of titles: financial advisor, wealth manager, financial consultant, registered representative, investment advisor representative, and more. These titles are largely unregulated — meaning almost anyone can use them. What matters isn’t the title. What matters is the legal standard the professional is held to.

There are two primary standards in the industry:

The fiduciary standard, which applies to Registered Investment Advisors (RIAs) and their Investment Advisor Representatives (IARs).

The Regulation Best Interest standard, which applies to broker-dealers and their registered representatives.

Those differences can influence how advice is provided and what standards apply.

What Is a Fiduciary Advisor?

Registered Investment Advisors (RIAs) are required by law to adhere to a fiduciary duty, governed by the Investment Advisers Act of 1940. RIAs must act in their clients’ best interests and typically charge fees for their services, either as a percentage of assets under management or on an hourly or fixed-fee basis.

The fiduciary standard encompasses duties of loyalty and care, demanding transparency, avoidance of conflicts of interest where possible, and full disclosure when conflicts cannot be avoided.

Critically, an investment advisor’s fiduciary duty is ongoing and requires advisors to place their clients’ interests above their own in all aspects of the advisory relationship — not just at the moment a recommendation is made, but continuously throughout the engagement.

In practical terms, this means a fiduciary advisor is legally obligated to recommend what is best for you — even when a different option might pay them more. They must disclose conflicts of interest. They must put your goals ahead of their own compensation. And that obligation doesn’t end after a single transaction.

What Is a Broker?

A broker — technically called a registered representative or associated person of a broker-dealer — operates under a different regulatory framework.

While SEC-registered investment advisors have historically been held to a fiduciary duty standard of care, broker-dealers were subject to the “suitability” standard, governed by FINRA Rule 2111, which required only that a broker-dealer have a reasonable basis to believe a recommended transaction or investment strategy was suitable for the customer based on their investment profile.

In 2020, the SEC adopted Regulation Best Interest (Reg BI), which raised the bar for broker-dealers. Under Reg BI, brokers are now required to act in the best interest of their clients when making recommendations about securities transactions or investment strategies — a standard stricter than the previous suitability standard, which only required that a recommendation align with a client’s financial situation and goals.

This was a meaningful improvement. But it is important to understand what Reg BI does not do. The main difference between the standards that govern broker-dealers and the fiduciary standard that governs investment advisors is the “scope of duty.” Broker-dealers are required to act in the best interest of their clients only at the point an investment recommendation is made. The fiduciary obligation of an investment advisor, by contrast, applies continuously.

Put simply: a broker’s best interest obligation is transactional. A fiduciary’s obligation is ongoing.

How Compensation Structures Create Different Incentives

One of the most meaningful practical differences between fiduciary advisors and brokers involves how they are paid.

Many brokers are compensated through commissions — fees paid by the financial product company when a product is sold to you. This can include commissions on mutual funds, annuities, life insurance policies, and other investment products. The amount of the commission often varies by product, which can create a financial incentive to recommend certain products over others.

The fee-only or fee-based model used by many RIAs helps mitigate conflicts of interest, aligning the advisor’s compensation with the client’s financial outcome.

A fee-based fiduciary advisor charges you directly — either as a percentage of assets managed, a flat fee, or an hourly rate. They are not paid more when you buy one investment product over another. That structural alignment is a meaningful distinction.

It is worth noting that the compensation model alone does not determine whether someone is a fiduciary. The legal standard that governs the relationship does. An advisor can be fee-based and still operate under a broker-dealer framework. The right question to ask is always: “Are you a registered investment advisor operating under a fiduciary standard?”

The Dual Registration Complexity

One nuance worth understanding: many financial professionals today hold dual registrations. Many financial professionals are “dual registrants,” meaning they are registered as both Registered Representatives of a broker-dealer and Investment Advisor Representatives of a fee-based advisor. The same person can change roles — one moment acting as a fiduciary advisor, the next as a Registered Representative. The legal duties and compensation models change, even if the person across the table looks the same.

This is an important point. If someone is dual-registered, you need to understand clearly which hat they are wearing during your interaction — and which standard of care applies to the advice they are giving you at any given time.

One way to help protect consumers is working with someone who operates as an Investment Adviser Representative under an SEC-registered RIA, with a fiduciary obligation that applies to every conversation and every recommendation.

What This Means for Indiana Retirement Planning

For pre-retirees in Northwest Indiana and the Greater Chicagoland area, this distinction matters especially when it comes to the following decisions:

Rollover recommendations. When you leave an employer and are deciding whether to roll a 401(k) into an IRA, the person providing the recommendation should be acting under a fiduciary standard. Rollover recommendations are an area where conflicts of interest have historically been most prevalent in the brokerage industry.

Annuity recommendations. Annuities can play an important and legitimate role in retirement income planning. But they also carry commissions that vary widely by product type and carrier. A fiduciary advisor evaluates annuity options objectively and recommends them when they genuinely serve your income needs — not because they pay a higher commission.

Investment planning. Whether you are invested in mutual funds, ETFs, or managed accounts, the fees embedded in investment products vary considerably. A fiduciary advisor is required to consider costs and how they affect your outcomes. A broker operating under Reg BI must act in your best interest at the point of recommendation but is not subject to the same ongoing monitoring obligation.

Comprehensive retirement income planning. Social Security optimization, Medicare planning, tax planning, estate coordination — these are areas where ongoing fiduciary guidance may make a meaningful difference. They require continuous advice and relationship-based counsel, rather than one-time transactional recommendations.

Questions to Ask Before Working With Any Financial Professional

Whether you are evaluating an advisor for the first time or reassessing an existing relationship, these questions will help you understand exactly what standard of care you are receiving:

1. Are you a Registered Investment Advisor or an Investment Advisor Representative of an RIA?

This establishes whether the fiduciary standard applies to your relationship.

2. Are you also registered as a broker-dealer or registered representative?

If yes, ask clearly which capacity they are acting in when they advise you — and what standard applies in that role.

3. How are you compensated — and do you receive commissions on any products you recommend?

Transparency on compensation is a hallmark of a fiduciary relationship. Any hesitation to answer this question clearly is itself informative.

4. Will you confirm in writing that you are acting as my fiduciary?

A fiduciary advisor should have no hesitation confirming this in your engagement agreement.

5. How do you handle conflicts of interest?

A fiduciary is required to disclose conflicts and manage them in your favor. Ask what conflicts exist and how they are handled.

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Form CRS: A Tool You May Not Know About

The SEC requires both broker-dealers and investment advisors to provide clients with a Form CRS — a brief relationship summary — that explains the type of services offered, fees, conflicts of interest, and the applicable standard of conduct.

If you have not seen or been offered a Form CRS by your current financial professional, you can request one. Reading it carefully will tell you a great deal about the nature of the relationship and the standard of care that applies to you.

About Patten Financial Group

Aaron Patten is an Investment Advisor Representative operating under Redhawk Wealth Advisors, Inc. — an SEC Registered Investment Advisor(RIA). Patten Financial Group operates as a fee-based fiduciary firm, meaning our obligation to act in your best interest applies to every conversation, every recommendation, and every planning decision we make together.

We serve pre-retirees and retirees across Northwest Indiana — including Porter County, Lake County, and the Valparaiso area — as well as the Greater Chicagoland area. Our planning focus includes retirement income planning, Social Security optimization, Medicare planning, annuity analysis, investment planning, tax planning, insurance planning, and estate planning coordination.

If you have questions about the type of advisor you are currently working with — or want to understand how a fiduciary relationship would work for your retirement plan — we welcome that conversation.

📞 Call us to schedule a complimentary retirement income review.

(219) 312-4128

📍 Serving Valparaiso, Indiana and the surrounding region.

Schedule Complimentary Retirement Income Plan Review

[This article is intended for educational purposes only and does not constitute personalized financial, tax, or legal advice. Information presented reflects general regulatory frameworks and is not a complete description of all rules, obligations, or requirements applicable to any specific financial professional or firm. Consumers are encouraged to conduct their own due diligence, including reviewing Form CRS and advisor registration records available at www.adviserinfo.sec.gov and www.brokercheck.finra.org.]

Investment advisory services offered through Redhawk Wealth Advisors, Inc., an SEC

Registered Investment Advisor. SEC Registration does not imply any level of skill or

understanding. Redhawk Wealth Advisors and Patten Financial Group are unaffiliated and

separate legal entities.

Reference Sources

1. SEC.gov — Regulation Best Interest and the Investment Adviser Fiduciary Duty

https://www.sec.gov/newsroom/speeches-statements/clayton-regulation-best-interest-investment-adviser-fiduciary-duty

2. Legal Information Institute (Cornell) — Regulation Best Interest (Reg BI)

https://www.law.cornell.edu/wex/regulation_best_interest_(reg_bi)

3. FINRA.org — SEC Regulation Best Interest

https://www.finra.org/rules-guidance/key-topics/regulation-best-interest

4. Charles Schwab — Broker-Dealers vs. Investment Advisors