What a Fiduciary Settlement Planner Is — and Why It Protects the Attorney Too

The Bottom Line

A fiduciary settlement planner is legally bound — not merely encouraged — to put the injured client's interests ahead of their own. That is the strongest of three escalating standards of care: suitability → best interest → fiduciary. For a personal-injury attorney, referring a client to a fiduciary does two things at once: it protects the client from conflicted, product-driven advice, and it reduces the attorney's own malpractice and ethics exposure for settlement-related decisions.

Three Standards of Care — and They Are Not Equal

Industry and regulatory sources describe a clear hierarchy, from lowest to highest:

1. Suitability — historically FINRA Rule 2111 for broker-dealers. A recommendation only has to be appropriate. Between two suitable products, a salesperson may recommend the one paying a higher commission.
2. Best interest — Regulation Best Interest (Reg BI), effective June 30, 2020, raised broker-dealers above pure suitability. But the SEC has been explicit that Reg BI "does not institute a fiduciary standard for broker-dealers equivalent to the standards under the Advisers Act," and the obligation applies only "at the time a recommendation is made," not continuously.
3. Fiduciary — the adviser must place the client's interests first at all times.

The Fiduciary Standard Is the Gold Standard

The fiduciary duty is anchored in federal law for SEC/state Registered Investment Advisers under the Investment Advisers Act of 1940. In SEC Release No. IA-5248 (June 5, 2019), the Commission reaffirmed that "Under federal law, an investment adviser is a fiduciary," owing a duty of care and a duty of loyalty. The duty of loyalty requires that an adviser "must eliminate or make full and fair disclosure of all conflicts of interest which might incline an investment adviser — consciously or unconsciously — to render advice which is not disinterested." This applies across the entire advisory relationship, not just to a single product pick.

The CFP Board standard is the other clear articulation: since its current Code and Standards took effect (October 1, 2019; enforced June 30, 2020), a CFP® professional must "act as a fiduciary, and therefore, act in the best interests of the Client" whenever providing financial advice.

Most Structured-Settlement Brokers Are Not Fiduciaries

This is the part that surprises people. Traditional structured-settlement brokers are licensed insurance producers, compensated by commission from the annuity issuer — an industry-standard one-time gross commission of about 4% of premium. As one settlement-planning firm puts it plainly, "If they only hold an insurance license, they have no fiduciary duty to the client, meaning they have no obligation to act in the client's best interests."

And the limited insurance "best interest" rule doesn't reach structured settlements anyway. The NAIC Suitability in Annuity Transactions Model Regulation (#275, 2020 revision) expressly states its requirements "do not create a fiduciary obligation or relationship" — and §4.C exempts "Settlements of or assumptions of liabilities associated with personal injury litigation." So even the modest best-interest standard does not apply here.

Designations differ too: the CFP® carries a fiduciary duty; the CSSC and MSSC structured-settlement designations are educational credentials that do not impose one.

Why It Matters Specifically in Settlement Planning

The most consequential settlement question is often lump sum vs. structured settlement vs. trust — and which financial vehicle to use. A commission-paid producer is compensated only when a structured annuity is placed, which creates a structural conflict around that very decision. A fiduciary must recommend the vehicle that is in the client's best interest even if it means less or no commission, and must disclose how and by whom they are paid. As the Special Needs Alliance notes, structured settlements "don't always make sense" — for example, when a client has large immediate needs like an accessible home or van. Only an adviser without a product-placement incentive can give that advice objectively.

How Referring to a Fiduciary Reduces Attorney Risk

PI attorneys carry their own professional duties. ABA Model Rule 1.1 requires competent representation — "the legal knowledge, skill, thoroughness and preparation reasonably necessary" — and Model Rule 1.4 requires the lawyer to "explain a matter to the extent reasonably necessary to permit the client to make informed decisions." Commentators argue these create an affirmative obligation to address a settlement's tax and benefit consequences, or to bring in a competent specialist.

The exposure is concrete:

• Grillo v. Pettiette / Grillo v. Henry (96th Dist. Ct., Tarrant County, Texas): a minor with cerebral palsy received a $2.5 million medical-malpractice settlement paid as a lump sum into the court registry, with no structured settlement and no special needs trust. She lost Medicaid and the earnings became taxable. The attorneys and guardian ad litem later paid a combined $4.1 million to settle malpractice claims — the most widely cited "settlement gone wrong" precedent.
• Benefit preservation. Per the SSA, the SSI resource limit is $2,000 for an individual — unchanged since 1989 and not indexed to inflation. A net settlement above that can disqualify a Medicaid/SSI recipient unless funds are spent down or placed in a first-party special needs trust.
• Medicare Set-Asides. There is no statutory mandate requiring an MSA in liability cases, but the Medicare Secondary Payer Act lets CMS deny future injury-related coverage if Medicare's interests are not reasonably considered — risk for client and attorney alike.

How to Confirm Fiduciary Status

"Fiduciary" depends on role and registration, not job title. Ask — and get the answers in writing:

• "Are you a fiduciary, and will you confirm it in writing?"
• "Are you a Registered Investment Adviser or an Investment Adviser Representative?"
• "How are you compensated, and by whom? Do you receive commissions from annuity providers?"
• "Will you give objective advice on lump sum vs. structured settlement vs. trust, even if it means you earn less or nothing?"

You can verify an adviser's registration through the SEC's Investment Adviser Public Disclosure database. "Fee-only" (compensated solely by the client) is the cleanest structure; "fee-based" blends fees and commissions.

What This Means for Your Practice

If a client receives or may need Medicaid/SSI, is or will soon be a Medicare beneficiary, or has future injury-related medical needs, treat settlement planning as a competence issue and bring in a specialist. Prefer an independent fiduciary who will provide a written fiduciary acknowledgment, document the client's informed choice (a "Grillo-style" acknowledgment if they decline advice), and coordinate the team — special-needs counsel, MSA allocation, and tax advice — before constructive receipt forecloses tax-free structuring.

Minted is an independent fiduciary firm. We'll put our standard in writing and evaluate the whole toolkit, not just the product that pays a commission. Refer a client or book a consult.

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This content states general fiduciary and settlement-planning standards only and makes no claim about any specific firm. It is informational and not legal, tax, or investment advice.