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.

Fiduciary Duty DefinitionImage Source: Pexels

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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