A fiduciary cannot be paid in ways its clients do not understand. Advisers are required to disclose their fees and, just as importantly, every form of compensation and the conflicts those create, clearly enough that a client can see the full cost of the relationship.
Fee disclosure appears in the Form ADV brochure and Form CRS, and it must describe how the firm charges, a percentage of assets, hourly, fixed, or otherwise, along with how and when fees are billed. Crucially, it must also disclose other compensation the firm or its people receive, such as commissions on insurance or products, and the conflicts of interest those create. The obligation is to reveal every way the firm makes money from the relationship.
Examiners focus on costs that are easy to obscure: third-party payments, revenue sharing, markups, and the total cost a client bears including underlying product expenses. A firm that discloses its stated advisory fee but stays quiet about the other ways it is compensated has an accurate-sounding disclosure that is nonetheless misleading, which is exactly the kind of thing that produces findings.
The safest posture is to over-explain the economics rather than under-explain them: state the fee, state the other compensation, and state the conflicts, in language a client can follow. Fee disclosure done plainly is both a compliance requirement and a trust-builder.
Disclose the fee, and every dollar behind it.
Greenridge L&C Advisors is a compliance consultancy, not a law firm. This is general information, not legal advice.