Under: Understanding Fiduciary Wealth Management
The conflicts most clients never see.
Even ethical advisers operate inside structures that shape recommendations. Knowing what those structures are is the first step in evaluating advice you receive.
Commission-based conflicts
The most visible conflict: when an adviser is paid by commission for selling a product, they have a structural incentive to recommend that product over alternatives — even when the alternatives are objectively better for the client. The conflict exists whether the individual adviser is honest or not; it's baked into the compensation structure.
Most commonly: variable annuities, indexed annuities, certain mutual fund share classes (A-shares with front-loads, C-shares with high ongoing fees), and proprietary structured products. None of these are inherently wrong — but the recommendation deserves scrutiny when the adviser's commission depends on the sale.
Proprietary product conflicts
When a firm offers in-house funds, separately-managed accounts, or insurance products, there's a soft pressure (sometimes explicit, sometimes cultural) to allocate client assets to those products even when external alternatives are stronger. The fiduciary standard requires disclosure, not avoidance, so this conflict can exist legally as long as it's disclosed in Form ADV.
Premier eliminated this structurally by being independent — we have no proprietary funds, no in-house insurance products, and no parent company whose products we're expected to steer clients into.
Soft-dollar arrangements + revenue sharing
Custodial relationships where the firm receives research, software, or other services from the custodian in exchange for client trading volume. Mutual fund "12b-1 fees" that flow from the fund company back to the adviser. Recordkeeper revenue-sharing in retirement plans. All of these are legal with disclosure but create incentives that subtly shape recommendations.
The "hat-switching" conflict
When an adviser is dually registered as both an investment adviser (fiduciary for advice) and a broker-dealer representative (suitability for transactions), they can switch hats during the same client meeting. The diagnostic question: "Across all the work we'll do together, will you be acting as a fiduciary the entire time?" An unqualified yes is rare from dually-registered advisers — and an unqualified yes is what you should be looking for.
For verification methods, see Verifying Adviser Credentials.
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