What is a fiduciary?
A fiduciary is a person or legal entity, such as a bank or brokerage firm, that has the power and responsibility of acting for another (usually called the beneficiary or principal) in situations requiring total trust, good faith and honesty. When you're the beneficiary of a fiduciary relationship, you give that fiduciary discretionary authority over your assets. Using a fiduciary is important if you want an advisor to manage your money or make unbiased investment recommendations.
According to the SEC, which regulates registered investment advisors as fiduciaries, the fiduciary duty also entails:
· Acting with undivided loyalty and utmost good faith
· Providing full and fair disclosure of all material facts, defined as those which "a reasonable investor would consider to be important"
· Not misleading clients
· Avoiding conflicts of interest (such as when the fiduciary financial advisor profits more if a client uses one investment instead of another or trades frequently) and disclosing any potential conflicts of interest
· Not using a client's assets for the advisor's own benefit or the benefit of other clients
Fiduciary Financial Advisors Represent Clients Objectively at Mader Shannon
The luxury of being able to maintain our independence translates into a better relationship with our clients. Being able to think and act strategically in the interest of clients and not beholden to a parent company allows Mader Shannon to offer a more fiduciary-centric service. Being a fiduciary financial advisor affords our clients a higher level of transparency in the way we provide our service, and perhaps more importantly, in how we are compensated for our service.
The biggest difference between a fiduciary financial advisor versus a financial advisor is the standard they’re held to when advising clients. Most financial advisors must sell investments that are suitable for clients, but fiduciaries must act with a higher standard of care.
For more information about fiduciary financial advisors, call Mader Shannonat (800) 838-9988.