Seeking a Fiduciary? Good Luck!

Jill and Joe Investor should look for investment guidance from someone acting as a fiduciary, not a commissioned salesperson. Sound advice? In reality it's becoming harder and harder to act upon.

When advisers work on commission they may pledge to "demonstrate our commitment to putting customers first." But as Reuters notes, it's a commitment with an asterisk. And increasingly, brokers aren't working for commissions alone. Instead they have become "fee-based" advisers. That's not the same as "fee only." But not necessarily so different, either. The WSJ ($) cites an Aite Group study of almost 400 registered representatives (who traditionally work on commission) and registered investment advisers (who traditionally work for fees). The results show that Jill and Joe Investor face a daunting challenge:

Brokers working on commission reported getting, on average, about 20% of their revenue from advisory and consulting fees.

"Fee-based" advisers got almost 60% of their revenue from commissions.

And advisers most closely resembling "fee-only" got over 15% of their revenue from commissions.

In real life, Jill and Joe don't pay much attention to the distinction between fiduciaries and investment salespeople. Can we blame them?