What is a

Fiduciary?

FIDUCIARY

The Investment Advisors Act of 1940 states the two basic duties a fiduciary owes to their clients: the duty of CARE and LOYALTY. The advisor must always serve the best interest of their clients and never put their own interests above the clients.

The duty of care and loyalty consists of ongoing advice, best execution, monitoring over time, and fair and full disclosure.

The advice must be suitable which includes using a client profile questionnaire. It will address the client’s investment experience, age, risk tolerance, and short-term and long-term goals.

Best execution, having discretionary authority is to provide the greatest value and minimize cost.

Monitoring at a frequency that is in the best interest of the client. This is considered by the scope of the relationship. If it involves ongoing investment management, reviews are then required to address the client’s financial circumstances and updates are made to reflect any necessary changes.

FAIR and FULL DISCLOSURE of all material facts of any conflict of interest are required so a client can fully understand by consent.

Finally, when a client enters a fiduciary relationship, regulators mandate the firm to present its firm brochure and the advisor to supply his/her brochure supplement.