How to Know If Your Fiduciary Financial Advisor Is Actually Working for You
A real case study on what "fiduciary" actually means — and what a real plan looks like.
A few weeks ago, a business contact asked me for a favor.
His father’s girlfriend is 61 years old. She’s retiring from the postal service in August.
A group that specifically works with retiring postal employees had come in, sat down with her, and presented what they called a complete financial plan.
He handed me the packet. Fifty-plus pages. Charts, risk tolerance questionnaires, investment allocations, projection graphs showing her living comfortably well into her nineties.
He said, “Before she signs anything, will you look at this?”
I started reading. By the third page, I knew exactly where this was headed.
“Fee-Only” and “Fiduciary” Are Not the Same Thing
The first page of the presentation identified the firm as fee-only. That’s a term most people associate with trust. No commissions. No products being pushed for a kickback. Just an advisor being paid directly by the client, acting in their interest.
Here’s what fee-only actually means.
It means no commissions on securities products. Stocks, ETFs, mutual funds — they can’t earn a commission on those. But fee-only says nothing about insurance products.
Fixed indexed annuities are classified differently. A fee-only advisor can recommend an annuity and receive compensation on it without violating their fee-only status.
And sure enough, three pages in, there it was.
Of her $625,000 in retirement savings, $300,000 was going into a fixed indexed annuity projecting a 3.3% rate of return. The other $325,000 would go into their advisory account, where they assumed a 7% rate of return.
Their annual fee: 1.8% on the advisory account.
Here’s the math on that design. She has a $27,000 per year gap between her pension, her Social Security, and the $87,000 she wants to live on in retirement.
Under this plan, she pulls that $27,000 from the annuity first. The advisory account sits untouched and growing.
Meanwhile, the advisor earns 1.8% per year on $325,000 — roughly $5,850 in year one — compounding upward for fifteen years while she never touches that account.
She takes from the account that doesn’t grow their fee that they make $21,000 in commission in year one. They earn on the account she never touches.
That’s not a conflict of interest — according to how the word “fiduciary” gets applied.
It is however the exact opposite of being a fiduciary and putting the client’s interests before their own.
Watch me explain the difference between a fiduciary and a non-fiduciary financial advisor.
The Word Fiduciary Has Become Marketing
I want to be careful here, because this conversation gets oversimplified fast.
Being a fiduciary does carry a legal standard. You’re required to act in the client’s best interest. The problem is that “best interest” has a wide lane.
You can design a plan that is technically legal, technically fiduciary, and still primarily serve your own compensation structure. The plan I was holding was a textbook example.
And here’s the other side of that coin: there are fiduciaries who refuse to use annuities on principle and who are still costing their clients enormous amounts of money through poor tax planning or failure to stress test a retirement against bad market sequences. Not selling an annuity doesn’t make you a good planner.
The question is never: is this advisor a fiduciary?
The question is: does this plan look like it was designed for the client or for the advisor?
What Was Missing from Her Plan
I read the entire presentation. Cover to cover.
Here’s what I did not find.
Not one word about income taxes. Not one mention of Roth conversion strategy. No analysis of how her pension and Social Security interact to determine what tax bracket she’ll be in when Required Minimum Distributions begin at 75.
No modeling of what her Medicare premiums look like at different income levels. Zero tax risk analysis.
She is 61, retiring in August. She has more than a decade before RMDs kick in. She has a gap period before Social Security where partial Roth conversions could permanently reduce her tax burden in retirement.
Her pension creates a baseline income that changes how every other dollar she withdraws gets taxed.
All of that was invisible in this plan.
What they gave her instead was an investment allocation and a projection line that assumed markets cooperate, income stays smooth, and nothing surprises her for the next 25 years.
A dollar lost to unnecessary taxes is a dollar gone forever. And this plan hadn’t thought about that once.
Why Sequence of Returns Risk Changes Everything
Here’s what concerns me most when I see a retirement plan that doesn’t stress test.
Sequence of returns risk is the idea that the order in which you experience market returns matters more than the average return itself.
If markets drop 30% in the first two years of your retirement while you’re pulling $27,000 a year from your portfolio, you’ve sold assets at the worst possible price. The compounding works against you from that point forward. You may never recover the ground you lost.
A 7% average return over 20 years sounds solid on paper. But if years one through three are negative and you’re withdrawing the entire time, that same 7% average can still result in a depleted portfolio.
The plan I was holding assumed a straight 7% return on $325,000 for fifteen years. No dip scenario. No stress. No preparation for the sequence that actually shows up.
When I ran her numbers through a down market in years one through three — not a crash, just a normal rough start — the plan failed. She ran out of money.
That’s what happens when a plan isn’t built to last. It works perfectly in the projections. It doesn’t work in the real world.
What Stress-Tested, Tax-Integrated Planning Actually Looks Like
When my firm Revolutionary Wealth rebuilt her plan, we ran it through multiple scenarios. Down market in years one through three. Flat market for five years. Average market.
Different Social Security timing. Partial Roth conversions during the window before RMDs begin.
Annuity included. Annuity excluded. Different annuity structures with different sequencing.
I looked at all of her income sources together — pension, Social Security, savings — and mapped out which accounts to draw from first and in what amounts to keep her in the lowest possible tax bracket over 30 years.
That is what tax-integrated retirement planning means. It’s not just investment management. It’s sequencing every dollar to minimize what goes to the IRS and maximize how long the rest lasts.
Her best outcome did include an annuity. Not the one they pitched. Not structured the way they structured it. But there is a version of this plan where a portion in an annuity protects her against the worst-case sequence and gives her a guaranteed income floor to build around.
The difference between the right annuity design and the wrong one isn’t always the product.
It’s who benefits from the way it’s used.
The Number That Matters
Over the course of her retirement, the redesigned plan adds over $600,000 in value compared to what she was about to sign.
The recommendations cut her fees in half versus what she was previously recommended.
And she can still retire in August like she planned.
That’s what a second opinion can do. The previously recommended plan was built around their compensation model first and her retirement second.
The Real Difference Between a Fiduciary and Someone Who Says They Are One
It is not the products they use or refuse to use.
A fiduciary who avoids annuities on principle but never addresses tax risk is still leaving money on the table.
A fiduciary who uses annuities inside a stress-tested, tax-integrated, client-first plan can be one of the best decisions you make. The vehicle doesn’t determine the outcome. The design does.
What separates a real fiduciary from someone who uses the label is method. It’s whether the plan was built to answer one question: in every scenario, across every market cycle, is this client going to be okay?
Before you sign any retirement plan, ask your advisor to show you five things.
A down market scenario in your first three years of retirement, and what happens to your income when it hits. Sequence of returns risk is the biggest threat most new retirees never see coming.
A tax strategy — not an investment strategy, a tax strategy — showing how withdrawals from each account affect your tax bracket, your Medicare premiums, and how much of your Social Security becomes taxable.
The plan run with and without the specific products they’re recommending, so you can see the difference in outcomes and understand what each one costs you.
The fee schedule modeled against your portfolio over 20 years, so you know what you’re actually paying over time, not just per year.
A projection that runs to age 95, stress tested against a bad early sequence.
If they can’t show you those five things, you don’t have a fiduciary designed financial plan.
You have a sales pitch.
What Revolutionary Wealth Is
I founded Revolutionary Wealth in Bentonville, Arkansas based on eight years of client feedback of what our clients said they wanted as an experience.
Down to earth, cost-effective advice from professionals with retirement planning experience, not theory.
Tax planning that helps them plan ahead of what’s coming, not just when they go to file.
The ability to setup an estate plan cost effectively without an attorney billing and upselling them at every turn, only to never speak with their other advisors or truly coordinate their assets.
Advisors who aren’t going to retire before they do and work instead of golfing three days a week.
Revolutionary Wealth is a fiduciary firm. Legally, that means we’re required to act in your interest. Practically, it means every plan we build gets stress-tested across multiple market scenarios, every income source gets mapped against its actual tax consequence, and no product goes in the design because of what it pays us.
Our fees are significantly below 1.8%.
We work primarily with pre-retirees and retirees, ages 59 to 67. That window before RMDs begin is the most leveraged financial period of your life.
Partial Roth conversions. Social Security timing. Sequencing withdrawals to keep you in the lowest tax bracket you can manage for as long as possible.
That’s not an investment strategy with a tax line item attached. That’s a plan.
We’re based in Bentonville and work with clients across the country.
If you’ve already got a plan, bring it. The first conversation is just a conversation.
We’ll tell you honestly what we see.
Standing Before the Long Green Table
A few years ago, I read the leadership book “The Wisdom of the Bullfrog” by Admiral William McRaven. Towards the end of the book, page 177 to be exact, are words that have forever stuck with me.
Admiral McRaven writes, ““Can you stand before the long green table?” Can you justify to reasonable men and women, sitting in judgment of your decisions, that the actions you are taking are moral, legal, and ethical and conform to the goals and objectives of the organization? If not, you should reconsider your actions.”
The truth is that anyone in a fiduciary capacity is truly operating in a high-stakes environment. Attorneys, physicians, CPAs, and some financial advisors are all held to a high-stakes standard.
The problem is all of these professions, not just financial advisors, gloss over the importance of the nature of their work due to routines and the mundane. The longer one tends to do it the more they lose sight of just how high stakes their role really is.
I’m human and I make mistakes just like everyone else. I don’t always professionally get it right, but I try my best. Most days I succeed, but many days I fail.
But every day and with every client, I see myself standing before that long green table. Their family, my family, God, and any advisor who could come behind my work sitting around the table judging my decisions and questioning the action I am about to take.
I do not fear much in life, but I deeply fear what could come from intentionally doing someone wrong. Life is too short to mistreat others for a short-sighted gain.
It’s easy to say that my exams, credentials, and experience make me a fiduciary but if I’m being honest, it’s sitting in front of that long green table.
See you next time, cheers!
Disclosures:
This blog contains general information that may not be suitable for everyone. The information contained herein should not be construed as personalized investment advice. There is no guarantee that the views and opinions expressed in this blog will come to pass. Investing in the stock market involves gains and losses and may not be suitable for all investors. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security. Revolutionary Wealth LLC does not offer legal or tax advice. Please consult the appropriate professional regarding your individual circumstance. Past performance is no guarantee of future results.
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Indexed annuities are insurance contracts that, depending on the contract, may offer a guaranteed annual interest rate and some participation growth, if any, of a stock market index. Such contracts have substantial variation in terms, costs of guarantees and features and may cap participation or returns in significant ways. Any guarantees offered are backed by the financial strength of the insurance company. Surrender charges apply if not held to the end of the term. Withdrawals are taxed as ordinary income and, if taken prior to 59 ½, a 10% federal tax penalty. Investors are cautioned to carefully review an indexed annuity for its features, costs, risks, and how the variables are calculated. c) If this includes fixed and indexed annuities, you can add this combined version: Fixed Annuities are long term insurance contracts and there is a surrender charge imposed generally during the first 5 to 7 years that you own the annuity contract. Indexed annuities are insurance contracts that, depending on the contract, may offer a guaranteed annual interest rate and some participation growth, if any, of a stock market index. Such contracts have substantial variation in terms, costs of guarantees and features and may cap participation or returns in significant ways. Investors are cautioned to carefully review an indexed annuity for its features, costs, risks, and how the variables are calculated. Any guarantees offered are backed by the financial strength of the insurance company. Surrender charges apply if not held to the end of the term. Withdrawals are taxed as ordinary income and, if taken prior to 59 ½, a 10% federal tax penalty.
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