An investment adviser's fiduciary duty covers the entire relationship and may not be waived (SEC, Release IA-5248, June 5, 2019), while the annuity rule most states use says its best-interest duty does "not create a fiduciary obligation or relationship" (NAIC Model Regulation 275, Section 6.A(1)(d), 2020).
What fiduciary means, in plain words
A fiduciary is someone the law requires to put your interests ahead of their own. The duty does not come from a job title. It comes from the role a person plays in a specific transaction.
For a registered investment adviser (a firm registered with the SEC or a state to give investment advice for pay) and its representatives, the duty comes from the Investment Advisers Act of 1940. In the SEC's words, the adviser's fiduciary duty "comprises a duty of care and a duty of loyalty" and "applies to the entire relationship between the adviser and its client" (SEC, Release IA-5248, June 5, 2019).
- Duty of loyalty: the adviser "must not place its own interest ahead of its client's interests" and must eliminate or fully disclose conflicts (same release).
- Duty of care: advice in the client's best interest, best execution of trades, and monitoring over the course of the relationship (same release).
The duty "may not be waived," and disclosure and consent "do not themselves satisfy" the duty to act in your best interest (same release).
Brokers: best interest, at the moment of the recommendation
A broker (a broker-dealer and its registered representatives) follows Regulation Best Interest (Reg BI), adopted June 5, 2019 and in force since June 30, 2020 (SEC, Release 34-86031, June 5, 2019; FINRA, Regulation Best Interest, checked October 14, 2026).
When a broker makes a recommendation, including which type of account to open or whether to roll a 401(k) into an individual retirement account (IRA), the broker must act in your best interest and "cannot place its own interests ahead" of yours. That duty is met through four parts: disclosure, care, conflict of interest and compliance (SEC Release 34-86031).
The SEC chose not to apply the adviser fiduciary standard to brokers (same release). Reg BI attaches at the time of each recommendation, and brokers "will not be required to monitor accounts" unless they agree to (same release). A broker who is not also registered as an adviser and calls himself an "adviser" or "advisor" is presumed to violate Reg BI's disclosure rule (same release).
Insurance agents: best interest for annuities, and expressly not a fiduciary
Fixed and fixed indexed annuities are insurance products regulated by state insurance regulators; variable annuities are both insurance products and securities (Investor.gov, Annuities, checked October 14, 2026). Agents follow the National Association of Insurance Commissioners (NAIC) Suitability in Annuity Transactions Model Regulation 275, revised in 2020 to add a best-interest standard (NAIC Model Regulation 275, 2020).
The agent must act in your best interest "without placing the producer's or the insurer's financial interest ahead" of yours, through four obligations: care, disclosure, conflict of interest and documentation (Model 275, Section 6.A). The same section says these requirements "do not create a fiduciary obligation or relationship and only create a regulatory obligation" (Section 6.A(1)(d)). Other limits:
- The agent considers only products he or she is licensed and authorized to sell (Section 6.A(1)(c)).
- The rule does not require recommending the annuity with the lowest compensation (Section 6.A(1)(h)) and creates no ongoing monitoring duty (Section 6.A(1)(i)).
- Commissions are not a "material conflict of interest" under the model (Section 5.I(2)), though the agent must say how he or she is paid and estimate the commission if you ask (Section 6.A(2)).
As of August 2025, 49 jurisdictions had implemented the 2020 revisions (NAIC, Annuity Suitability Best Interest Model Regulation brief, August 2025). California's version, Insurance Code sections 10509.9200 to 10509.9210, took effect January 1, 2025 and carries the same "does not create a fiduciary obligation" wording (California Insurance Code, Article 9.5, checked October 14, 2026). Model 275 covers annuities only (Section 2), not life insurance such as indexed universal life (IUL). Insurance agents are generally not fiduciaries unless they separately agree to be one, for example under an advisory contract.
Fiduciary some of the time: dual registrants and the CFP Board duty
Many firms are registered both as a broker and as an adviser. The SEC calls them dual registrants and tells investors to "make sure you understand when they are acting as a broker and when they are acting as an adviser" (Investor.gov/CRS, checked October 14, 2026). One person can be a fiduciary on your managed account, a broker on your brokerage IRA and an insurance agent on an annuity, in the same meeting.
A separate duty comes from a credential. Under CFP Board's Code of Ethics and Standards of Conduct, "at all times when providing Financial Advice to a Client, a CFP professional must act as a fiduciary" (CFP Board, Code of Ethics and Standards of Conduct, checked October 14, 2026). The code took effect October 1, 2019 and has been enforced since June 30, 2020 (CFP Board, Miscellaneous FAQ, checked October 14, 2026). CFP Board is a private certifying body, not a government regulator. See financial designations decoded.
Workplace plans, ERISA, and the Labor Department rule that never took effect
Under the Employee Retirement Income Security Act (ERISA), the people who run a workplace plan are fiduciaries. They must act "solely in the interest" of participants, carry out their duties prudently, diversify plan investments and pay only reasonable plan expenses (U.S. Department of Labor, Meeting Your Fiduciary Responsibilities, September 2021).
Whether someone recommending a rollover out of a plan is an ERISA fiduciary depends on a 1975 five-part test, which includes advice given "on a regular basis." The Labor Department's Retirement Security Rule, published April 25, 2024, would have replaced that test with a broader one (Federal Register, 89 FR 32122, April 25, 2024).
It never took effect. Two Texas federal courts stayed it on July 25 and 26, 2024. The Labor Department's appeal was dismissed at its own request on November 28, 2025, and the Department published a notice implementing the court vacatur on March 20, 2026, effective April 20, 2026 (Federal Register, 91 FR 13503, March 20, 2026). The 1975 test remains the rule. Advice fiduciaries who use the 2020 exemption for rollovers must give you the specific reasons a rollover is in your best interest (same notice). As of October 14, 2026, we found no newer Labor Department rule on this definition in the Federal Register.
What each standard does protect
Each standard protects you, and none guarantees good advice.
- Reg BI applies to rollover and account-type recommendations and requires firms to eliminate sales contests and quotas tied to specific securities within a limited period (SEC Release 34-86031).
- Model 275 requires the agent to learn your finances, explain the basis for the recommendation in writing, and weigh surrender charges and lost benefits on any replacement (Section 6.A(1)(j)).
- The adviser fiduciary duty is broader and ongoing, but conflicts can remain once disclosed. An adviser paid a percentage of assets has an incentive to encourage you to keep more money in the account, a conflict the SEC's own Form CRS instructions use as an example (SEC, Form CRS Instructions, checked October 14, 2026).
Ask which standard applies to each recommendation, in writing. Fees are compared in fee-only vs fee-based, the standards side by side in best interest vs fiduciary, and the disclosure documents in Form CRS and Form ADV.
Go deeper
Fee-Only vs Fee-Based vs Commission: How Your Advisor Gets Paid
A 1% advisory fee on $1,000,000 is $10,000 a year. Fee-only, fee-based and commission pay compared, with SEC fee rules checked October 14, 2026.
Best Interest vs Fiduciary: Six Standards, Side by Side
Reg BI took effect June 30, 2020 (FINRA). See how it compares with suitability, the annuity rule, ERISA and adviser fiduciary duty, side by side.
Form CRS and Form ADV: How to Read the Two Pages That Matter
Since June 30, 2020, brokers and advisers must hand you Form CRS (FINRA). How to find it and Form ADV Part 2, what each section says, and red flags.
One $600,000 rollover, five different duties
Hypothetical: a 66-year-old with a $600,000 401(k) is told to roll it into an IRA. Here is what each professional owes on that one recommendation, under the rules cited above. Fees are illustrative only.
| Who recommends the rollover | Standard and duty owed | Disclosure required | Conflicts allowed | After the sale |
|---|---|---|---|---|
| Investment adviser representative (1% a year advisory fee, hypothetical) | Advisers Act fiduciary: care and loyalty (SEC, June 5, 2019) | Form CRS and Form ADV Part 2 brochure | Yes, if fully disclosed with informed consent; the fee would be $6,000 in year one | Ongoing, at the agreed monitoring frequency |
| Broker (commissions on funds bought) | Reg BI best interest at the time of the recommendation (SEC, June 5, 2019) | Form CRS plus Reg BI disclosure of fees and conflicts | Yes, disclosed and mitigated; sales contests on specific securities must be eliminated | No duty to monitor unless agreed |
| Insurance agent (annuity commission paid by the insurer) | Model 275 best interest; expressly not fiduciary (NAIC, 2020) | Agent disclosure form; commission estimate on request | Yes; commissions are not a "material conflict" under the model | No ongoing monitoring duty |
| CFP professional | Fiduciary at all times when giving financial advice (CFP Board, October 1, 2019) | Material conflicts disclosed, informed consent | Must avoid or disclose and manage | Per the engagement |
| ERISA advice fiduciary using the 2020 exemption | ERISA and Internal Revenue Code fiduciary, if the five-part test is met (DOL, March 20, 2026) | Written specific reasons for the rollover | Only under the exemption's conditions | Per the exemption |
The arithmetic on the fee line: 1% of $600,000 is $6,000 for the first year. The same decision can carry five different duties, depending on which hat the person wears.
Red flags
- "I'm a fiduciary" said out loud, with nothing in writing that covers the specific account or product being recommended.
- A business card that says "financial advisor" while the Form CRS or BrokerCheck record shows only broker or insurance registration.
- A rollover recommendation with no written explanation of why leaving money in the plan is worse for you.
- An annuity recommendation from someone who says the commission is "paid by the company, so it costs you nothing."
- Reluctance to say how they are paid on this specific recommendation, or an answer only in general terms.
- A managed account and a commission product recommended in the same meeting with no mention of which standard applies to each.
- Pressure to decide before you have read the Form CRS or the Form ADV Part 2 brochure.
- A claim that the Labor Department fiduciary rule now covers every retirement recommendation; the 2024 rule never took effect.
- An agent who compares only the products he or she is licensed to sell and never mentions other types of options.
- A replacement of an existing annuity that restarts a surrender period with no written comparison of what you give up.
Questions to ask before you sign
- Will you put in writing that you are acting as a fiduciary at all times, for all of my accounts?
- On this specific recommendation, are you acting as an investment adviser, a broker or an insurance agent?
- How are you and your firm paid on this recommendation, in dollars, and is any part a commission?
- Can I have your Form CRS and your Form ADV Part 2 brochure and brochure supplement before we decide?
- If I roll over my 401(k), what will I pay each year that I do not pay in the plan today?
- Why is a rollover better for me than leaving the money in my employer plan? Can you put the reasons in writing?
- Will you monitor this account after the sale, and how often?
- Are there products you cannot sell me, or products you are paid more to recommend?
- Do you or your firm have any disciplinary history, and for what type of conduct?
- If this is an annuity, what is your reasonable estimate of the commission, and is it paid once or over time?
Read This Before You Sign
A one-page checklist: the red flags in annuity and indexed universal life (IUL) sales, and the questions to ask before you sign anything. The questions that show whether the person advising you is a fiduciary on this account, and how they are paid. We’ll email it to you.
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Sources
- SEC: Commission Interpretation Regarding Standard of Conduct for Investment Advisers, Release IA-5248 (June 5, 2019)
- SEC: Regulation Best Interest, Release 34-86031 (June 5, 2019)
- Investor.gov: Investor.gov/CRS, relationship summaries and dual registrants (checked October 14, 2026)
- NAIC: Suitability in Annuity Transactions Model Regulation 275 (2020)
- NAIC: Annuity Suitability Best Interest Model Regulation brief (August 2025)
- California Legislative Information: Insurance Code Article 9.5, sections 10509.9200 to 10509.9210 (checked October 14, 2026)
- CFP Board: Code of Ethics and Standards of Conduct (checked October 14, 2026)
- Federal Register: Retirement Security Rule, Notice of Court Vacatur, 91 FR 13503 (March 20, 2026)
- Federal Register: Retirement Security Rule: Definition of an Investment Advice Fiduciary (April 25, 2024)
- U.S. Department of Labor: Meeting Your Fiduciary Responsibilities (September 2021)
The Retirement Literacy Foundation is a 501(c)(3) public charity. This page is general education, not tax, legal or investment advice. Nothing is sold here, no product is recommended, and RLF accepts no funding from financial companies. Rules and figures change; each one above shows its source and date. Check anything you plan to act on with your state insurance department or a qualified professional who is not paid on the product.