February 3rd, 2013
What does fiduciary mean and why should you care when it comes to handling your money?
What does fiduciary mean and why should you care when it comes to handling your money?
Fiduciary is legal ethical relationship between two parties. A fiduciary accepts the trust of another party must act in the best interest of the party who has extended this trust. The fiduciary must never be in a position where the fiduciary’s interest are in conflict with the person or party who has placed trust in them. For example a lawyer, doctor, guardian, teacher and priest all practice fiduciary duty. However a business partner or spouse may not.
There are financial or investment advisors which should be held to a fiduciary duty. A fiduciary will be liable if proven to have gained from the relationship whether due to conflict of interest or taking advantage of their position.
Well said, Aaron. A true fiduciary is hard to come by when dealing with the financial industry. Most “experts” are stuck pushing products based on the high commissions (load mutual funds, cash-value life insurance, annuities, etc.) the firm and the salesmen can earn. This leaves very few people in the industry who can truly be called a fiduciary (just because someone tells you they are should not be accepted as fact). Fee-only financial planners are pretty close to the real thing, but finding one who will accept clients with less than $200,000 is difficult.
This leaves us with one true fiduciary for the individual. YOU! Educate yourself on finances so you can be your most trusted advisor. You are capable. You are smart enough. You are the answer. Use this site to enhance your abilities. Take control of YOUR money!