Making the fiduciary distinction in financial advice

Huston-Fox is a fee-only, fiduciary, investment management firm. Let me explain that mouthful of heavy adjectives in terms of the firm-client relationship.

Within the realm of financial advisors, there are part-timers and full-timers, each with various licenses, credentials, and experiences. About 90 percent of all advisors use a set of products that they sell to clients where they are paid a commission that can ranges from a few percent to as high as 12 percent on a sale. Products sold must be considered suitable but may not necessarily be in the client’s best interest.

Many of this 90 percent are called fee-based advisors. They can sell commission products like life insurance, long-term care insurance, annuities and also fee-based investment management accounts. In essence, they are financial advisors who can sell both products and also charge fees. The line between suitability and best interest can get confusing.

The other 10 percent of advisors are only paid directly for services provided to clients and operate under a strict fiduciary standard with clients. These advisors need to provide services that are from a fiduciary standpoint; meaning the advisor must act solely in the best interest of the client, even if that interest is in conflict with the advisor’s financial interest. A fee only advisor will never accept commissions on any products.

If you are comfortable with your advisor’s style, understand how you are paying for your investments, and have trust in your advisory relationship, you likely are fine in your current relationship.

The challenge I see several times a week is in helping prospective clients peel back the onion layers in their investments and truly understand what they are invested into and what they are paying. About half the time there is a stark discovery. The rest of the time the findings match up with expectations.

So, what is someone in need of investment and financial advice to do? Ask questions and get answers in writing. We get this information for nearly everything else we do: the new deck has estimates; our prescriptions show us the costs, etc.

First, ask how the advisory firm is compensated. Is it fee-only? (which is a fiduciary)? Fee- based? Commission based? Then research the firm or advisor at to confirm.

Next, ask if there is an agreement/contract that describes how the advisor will be paid for working with you. Always, always, get this in writing. Our document is one page, pretty simple, and vitally important.

Third, ask what percentage of revenue comes from insurance products and annuities. If the answer is anything more than zero percent, the advisor cannot be fee-only. Be wary of annuity sales. Insurance products pay among the highest commissions in the financial services industry to the selling agent and you might be stuck for up to 7 years or longer.

Ask if the advisor accepts referral fees or pays referral fees for sending or receiving clients from attorneys, accountants, mortgage brokers, or anyone else. Our firm has chosen to not pay or accept any referral fees. Some firms will and you need to know this in order to help understand potential conflicts of interest.

You should also ask if the prospective financial advisor receives the same payments for recommendations or if some products will pay them more or less.

The financial incentive of the selling advisor is critical to understand and evaluate. A fee-only firm will have a level playing field where clients pay the same rate for services. There is no economic incentive to sell products, rather, a fee-only firm has a fee structure that ties client success and the firm’s success together. An old friend of mine talked frequently about the inherent economic bias in our industry and how a fee-only firm works diligently to eliminate this worry.

So, the comment often arises, “Ryan, we are interested in a fee-only firm and how do you get paid?”

Any fee-only firm will put that in writing, within the first few minutes of an introductory meeting. Our fee is 1.00 percent per year. We add up all accounts every quarter (four times in a year) and then debit 0.25 percent from each account. This fee does go down on higher assets but up to a certain dollar amount, clients pay this rate. Most fee-only firms operate this way but many also charge additional fees. But, they will put that in writing too so an honest assessment can be made.

There are no other ways that we are paid: no commissions; no referral fees; no product kick- backs, or other planning charges.

We are free to pick whatever investments inside portfolios we feel are entirely best for each client without an interest in what will pay us more or less to use. Our fee includes investment management, ongoing investment advice, meetings with us, meetings with client attorneys/CPAs/insurance agents, and more.

I am happy to email out the fiduciary questionnaire and the fiduciary oath that might be helpful or provide a second opinion analysis.

This is a brief review of critical aspects regarding what a fiduciary is and isn’t. Over time, my hope is that the financial services industry continues to evolve into a much more level playing field for investors seeking financial advice.

Ryan Fox, Huston-Fox Financial Advisory in Gettysburg, can be reached at 717-398-2040 or

Office Hours

Mon – Fri: 8:30 AM to 4 PM


Areas We Service

  • Gettysburg, PA and all of Adams County
  • Harrisburg, PA and all of Cumberland County
  • York, PA and all of York County
  • Chambersburg, PA and all of Franklin County


Recent Articles

First Quarter 2023 Commentary
Third Quarter 2018 Client Commentary
Second Quarter 2018 Client Commentary