Fiduciary Duty Definition – What Does It Mean to Act as a Fiduciary?
A fiduciary is defined as any individual or entity (like a financial advisor, investment manager or wealth manager) that has been given the power to act on behalf of another in situations that require great trust, honesty, and loyalty.
Taking on a fiduciary role requires your advisor to act in your best interest.
As a fiduciary, an advisor is required to set aside personal motives (i.e., commissions or financial gains) and conflicts of interest in favor of pursuing the best outcome for your unique financial situation.
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Fee-Only vs. Fee-Based Advisors
While fee-only financial advisors, financial planners, and wealth managers have a fiduciary duty to recommend the financial product that is best suited for a client, fee-based and commission-based advisors are only required to recommend a “suitable” investment.
As such, the average consumer (based on a Google keyword search analysis that we performed) tends to seek fee-only types of advisors that have a fiduciary responsibility to always act in their clients’ best interest.
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