Investopedia defines a fiduciary as follows:
A fiduciary is a person or organization that acts on behalf of another person or persons, putting their clients' interests ahead of their own, with a duty to preserve good faith and trust. Being a fiduciary thus requires being bound both legally and ethically to act in the other's best interests.
The word gets thrown around a lot, especially by the people that advertise the CFP designation. CFP stands for Certified Financial Planner. Think of a Certified Financial Planner how you would a Board Certified General Physician. To earn this designation, advisors do a specific Master's level coursework which usually takes 12-18 months to complete and then sits for a board exam. Their course of study is around general financial planning concepts including General Financial Planning, Insurance, Investments, Estate Planning, Tax Planning, Education Planning, and more.
Many Financial Planners find that their on-the-job experience and continuing education, as well as securities & state exams, are adequate education to help the clients they typically serve in their practice.
Although an advisor may hold the CFP designation, they may possibly be wearing multiple hats and may not always be acting as a Fiduciary. The easiest way to know if your advisor is working within their capacity, striving to act as a fiduciary is to ask the advisor. Financial Planners or Advisors can hold themselves to a fiduciary standard with or without the CFP designation. I charge clients for Financial Advice, ongoing or a la carte, and charge an Assets Under Management fee for ongoing Investment Advice, and in those cases am being held to a fiduciary standard.
The key here is this: are you paying a fee for advice? Likely, if the advisor is giving you a free Financial Plan as a part of a process that ends in selling you a commissionable product (life insurance is common), they are not acting as a fiduciary-CFP or not. If you're paying the advisor for a plan or paying them a fee to manage your assets, that advisor is striving to act as a fiduciary because you've paid them for their advice. You likely also have some sort of contract with them to manage your assets or for Financial Advice.
A person isn't a fiduciary, they act as one.
There are plenty of other designations you may see that are common for financial planners. I, for example, advertise the CDFA (Certified Divorce Financial Analyst) designation and I'm often referred to women going through a divorce or entering into a new marriage (the divorce designation has been a great resource). This designation has been uniquely helpful in qualifying me to work with a specific group of people.
I think of myself as a specialist, more than a generalist.
Therefore, I focus most of my continuing education on specialty designations and continuing education. I can do general planning, learned in the field, but enjoy the added complexity of Divorce & Pre-Marital Planning.
For a full list of Financial Designations, check out this site by FINRA: https://www.finra.org/investors/professional-designations. FINRA is the governing organization for Financial Professionals.
Do you need a CFP or a fiduciary? The choice is yours. These days, most people find that getting objective fiduciary level advice is what they'd prefer and there are plenty of advisors that do Fee-Based or Fee-Only Financial Planning. They often carry the title "Financial Planner" but you should always ask the advisor what their specialty area is and if they strive to act as a fiduciary.
I'd like to note that in my 10+ years in Financial Services, I've met lots of Advisors. Plenty of them have your best interest in mind no matter how they are paid, some simply don't. It's always best to interview your advisor, share your goals, and make sure you feel they're putting your goals first in your planning. Make sure their process makes sense and they're open about fees. Ask them how they're paid. If you don't have a great feeling, pass! There are plenty of Financial Advisors in the sea.
If you're looking for a Fee-Based Financial Planner and think we might be a fit to work together, click this link to schedule a free introductory chat: https://go.oncehub.com/HerPlanningOnboarding