Finance Dictionary
Fiduciary
Definition
A person or organization that acts on behalf of another person or persons, putting their clients’ interest ahead of their own.
Deep Dive
A fiduciary is an individual or organization legally and ethically bound to act solely in the best interest of another person or entity, known as the beneficiary. This relationship is characterized by the highest degree of trust and confidence, requiring the fiduciary to place their client's financial well-being and interests above their own. The fiduciary duty encompasses obligations such as loyalty, prudence, disclosure, and avoiding conflicts of interest, ensuring that all decisions are made with the beneficiary's welfare as the paramount concern.
Examples & Use Cases
- 1A financial advisor with a fiduciary duty recommends investment strategies that solely benefit their client's retirement goals
- 2A trustee manages a trust's assets strictly according to the grantor's wishes and in the best interest of the beneficiaries
- 3A corporate board member has a fiduciary duty to act in the best interest of the company's shareholders, not their personal gain
Related Terms
TrustDuty of CareConflict of Interest