What is a fiduciary? And can AI be one?
A fiduciary is a person or company legally required to put someone else’s interests ahead of their own.
The word turns up in a lot of places. Whoever settles a parent’s estate is a fiduciary. So is a trustee, a guardian, a company’s board of directors. What they all have in common is that someone else’s money or affairs are in their hands, and the law is clear about whose interests come first.
In money, the version that matters is this one: a registered investment adviser is a fiduciary to its advisory clients — the people it actually advises. It has to put their interests first, tell them where its own interests could pull the other way, and recommend what it reasonably believes is in their best interest rather than what pays the firm more.
This page covers what that duty actually requires, how it differs from the standard brokers are held to, and what changes when the adviser is AI.
What does a fiduciary duty actually require?
It isn’t a promise of good results. It’s a set of rules about how advice gets made. The SEC describes it as two duties — care and loyalty (Release No. IA-5248).
Care has three parts:
- Advice the firm reasonably believes is in your best interest, not merely advice it could defend;
- Best execution, meaning the most favorable trade terms it reasonably believes are available to you; and
- Attention over time, scaled to the relationship you agreed to — continuous advice owes more than a one-time plan.
Loyalty means the firm can’t put itself ahead of you. In practice that’s about conflicts: it has to eliminate a conflict, or disclose it fully and fairly so you can agree to it knowingly. Disclosure isn’t a universal cure — the SEC has said some conflicts can’t be handled by disclosing them, and those have to go.
None of it guarantees an outcome. A fiduciary can give careful, conflict-free advice and you can still lose money. Markets decide that, not the duty.
And it’s owed to clients, which matters more than it sounds. Reading a firm’s website doesn’t make you one. Neither does opening a self-directed brokerage account there — self-directed means you make your own decisions, and an advisory relationship is a separate step with its own agreement. So when a firm says it’s a fiduciary, hear it as: a fiduciary to its advisory clients, within the scope it agreed to.
A brokerage customer isn’t owed nothing, though. Regulation Best Interest covers a broker-dealer’s recommendations to retail customers — a different standard with a different scope.
Can an AI have a fiduciary duty?
The software itself can’t hold a duty. The firm behind it can, and that is where the obligation sits.
A fiduciary duty is something a person or a company carries. Under the Advisers Act it attaches to whoever is acting as the investment adviser — not to a model, a feature or an app. The SEC’s position is that delivering advice through an algorithm doesn’t change the obligations that apply (IM Guidance Update No. 2017-02, “Robo-Advisers”).
So the real question is never whether an AI is a fiduciary. It’s whether the firm offering it is acting as an investment adviser, how it’s registered, and whether you’re its advisory client.
That has the following practical consequences:
- A general AI tool that isn’t acting as your adviser owes you no fiduciary duty — what governs it is mostly its terms of service. The reverse matters too: the duty follows whether a firm is acting as an adviser, not whether it filed a registration. The Advisers Act’s antifraud rules reach unregistered and exempt advisers.
- A registered firm’s duty doesn’t switch off because software wrote the advice.
- The duty doesn’t make the answer right. AI can sound confident and be wrong. No legal duty fixes that.
- And it doesn’t cover everything the tool discusses. A firm can owe a full duty on a narrow set of activities and none on the rest — your accounts there, but not holdings elsewhere or topics outside securities. The boundary is in its Form ADV Part 2A.
And a fiduciary duty does not imply a person. A firm can owe you a fiduciary duty and offer no human advisor to speak to. Those are separate questions, and worth asking separately. Read AI advisor vs human financial advisor to learn more.
To check any provider, look the firm up on adviserinfo.sec.gov and read its Form CRS — a short, plain-English document that says what the firm is registered as and which standard applies.
The M1 bottom line
M1 Advisor is an AI financial advisor that gives personalized advice held to a fiduciary standard. Learn more about M1 Advisor here. It is offered by M1 Advisory Services LLC, an SEC-registered investment adviser, which you can verify on adviserinfo.sec.gov.
It answers personal finance questions, summarizes what is in your M1 accounts — performance, past transactions and dividends — and explains how the platform works. Three limits are worth knowing:
- It recommends; you act. M1 Advisor is non-discretionary, so it cannot place trades or move money on your behalf.
- You decide what it sees. It has no access to your data until you opt in.
- It does not predict markets. It cannot forecast performance or guarantee returns, and it does not carry real-time market data.
The advisory duty covers securities held within the M1 platform. M1 Advisor can use balances you link from elsewhere for context, but it doesn’t advise on holdings at other firms — including employer plans and equity compensation — and guidance outside securities recommendations is informational rather than advice carrying the Advisers Act duty.
M1 Advisor reads all your M1 accounts in detail, and it can see balances from accounts you hold elsewhere once you link them through the M1 Balance Sheet. Accounts are not reviewed by human advisory personnel, and M1 does not offer access to human advisors.
M1 Advisor is included at no additional cost through December 31, 2027. Using the M1 platform costs $3 a month, waived in any billing cycle where total M1 assets reach $10,000 on at least one day; other fees may apply, and the details are in the M1 Fee Schedule.
Frequently asked questions
It depends on how the firm is registered, and you can check rather than ask. Look the firm up on the Investment Adviser Public Disclosure database, which covers both SEC-registered and state-registered advisers, and read its Form CRS, which says what the firm is registered as and which standard applies to it.
A firm can be an investment adviser, a broker-dealer, or both — and where it’s both, the standard depends on which hat it’s wearing with you.
It depends on the platform, not the category. Some automated investing platforms are offered by registered investment advisers, and where that’s the case the firm owes its advisory clients a fiduciary duty within the scope of that advisory relationship. Others operate differently, and registration varies.
Confirm it on adviserinfo.sec.gov rather than assuming automation implies registration.
Advisory products and services are offered by M1 Advisory Services, LLC, an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Advisory services are distinct from the brokerage products and services offered by M1 Finance LLC. Clients receiving advisory services must also maintain brokerage accounts with M1 Finance LLC, which is a separate legal entity and a Member FINRA/SIPC. For important information about M1 Advisory Services, LLC, including fees, services, and conflicts of interest, please review our Form ADV Part 2A and Form CRS.
Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results. This content is for informational and educational purposes only and does not constitute investment, tax, or legal advice, and it is not a recommendation of any particular service or strategy.
Descriptions of fiduciary obligations, registration requirements and regulatory standards are general summaries current as of publication; what applies depends on the firm, the activity, the relationship and the jurisdiction, and is set out by the SEC, FINRA and state regulators. Nothing here is legal advice or a statement of what any particular firm owes you — consult qualified counsel or the firm’s own disclosures.
Use of the M1 platform is subject to a $3 monthly platform fee, waived in any billing cycle in which total M1 assets reach $10,000 on at least one day, and charged whether or not M1 Advisor is used; other fees may apply. See the M1 Fee Schedule and the Platform Fee Disclosure.
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