Only 4.92% of advisors are true fiduciaries. Is yours?
An Analysis of Investment Advisor Representatives and Bureau of Labor Statistics Data: Determining the Percentage of Financial Advisors Acting as “True Fiduciaries”
In the financial services industry, the concept of acting as a fiduciary—putting the client’s best interests ahead of all else—has become a litmus test for ethical practice. However, determining how many financial professionals truly operate under a fee-only fiduciary model reveals a significant gap between perception and reality.
Industry Snapshot: Financial Professionals in the U.S.
According to the Bureau of Labor Statistics (2023), the financial services landscape in the United States includes:
513,000 financial services sales agents, encompassing roles such as stockbrokers and commodities traders.
321,000 personal financial advisors, offering financial planning and investment guidance to individuals.
Together, these figures total 834,000 professionals engaged in roles that directly or indirectly affect individuals' financial outcomes.
Investment Advisor Representatives: A Subset
Among these professionals, 77,468 individuals are registered as Investment Advisor Representatives (IARs), according to the Financial Industry Regulatory Authority (FINRA, 2022). IARs are often seen as closer to the fiduciary standard due to their regulatory obligations. However, even within this group, a significant portion still earns commissions.
A recent analysis by Welsh (2024) indicates that 47% of IARs receive commissions, leaving only 53% as truly fee-only fiduciaries.
Applying this percentage, the total number of fee-only IARs is approximately 41,958 individuals.
The True Percentage of Fee-Only Fiduciaries
To contextualize this figure, let’s consider the broader pool of financial professionals (advisors and brokers). Dividing the number of fee-only IARs (41,958) by the total number of financial professionals (834,800) yields a striking conclusion:
Only 4.92% of financial professionals operate as fee-only fiduciaries.
This percentage has seen growth from an estimated 2% in 2018 (Mantell, 2018), reflecting progress but also underscoring the rarity of this practice in an industry dominated by commission-based models.
References:
Bureau of Labor Statistics. (2023). Occupational Outlook Handbook. U.S. Department of Labor: Securities, Commodities, and Financial Services Sales Agents.
Bureau of Labor Statistics. (2023). Occupational Outlook Handbook. U.S. Department of Labor: Personal Financial Advisors.
Financial Industry Regulatory Authority. (2022). 2022 FINRA industry snapshot. Financial Industry Regulatory Authority.
Mantell, R. (2018, March 19). Is it time to adopt a uniform fee-only standard for financial advice? The Wall Street Journal.
Welsh, J. (2024, October 31). What role do commissions now play for advisors? Investment News.
