What Is A Fiduciary?
A fiduciary is an individual or institution who acts on behalf of another person or individuals, placing the interests of their clients ahead of their own, and is obligated to maintain good faith and trust. Being a fiduciary entails being legally and ethically obligated to act to the best advantage of the other. That trust and confidence must be knowingly accepted by the fiduciary.
A fiduciary may be in charge of a person’s overall well-being. Still, their job also involves finances, such as managing the assets of another person or a group of people. The fiduciary obligation of money managers, financial advisers, bankers, insurance agents, accountants, executors, board members, and corporate executives is to provide utility or satisfaction.
A fiduciary is legally obligated to prioritize their client’s interests before their own. A trustee and a beneficiary, corporate board members and shareholders, executors, and legatees are examples of business interactions where fiduciary obligations apply. Anyone having a legal obligation for handling someone else’s money, such as a member of a charity’s investment committee who monitors how money is coming in and going out simultaneously, is referred to as an investment fiduciary.
Registered investment advisors have a fiduciary duty to clients; broker-dealers have to meet the less-stringent suitability standard, which doesn’t require putting the client’s interests ahead of their own. From this, we can say that due to the job or the service a person renders to another, they automatically become a fiduciary making sure that they must serve the clients or customers get the maximum satisfaction they paid for it deserve.
A fiduciary obligation is a legal term that refers to a connection between two parties in which one is obligated to behave only in the interests of the other. A fiduciary owes a legal obligation to a principle, and extreme caution must be exercised to guarantee no conflict of interest between the fiduciary and the client.
Jordan is a banker and an investment expert, and he decided to act as a fiduciary to Mr. Spencer, a very busy businessman.« Back to Glossary Index