Have you heard the term fiduciary lately and wondered what exactly a fiduciary is? Some people aren’t too clear about what a fiduciary does, and they might need a bit more information. Essentially, a fiduciary is a financial investor who is obligated to help you make actions that are in your best interest. Not all financial advisors have a fiduciary duty to uphold, but some of them do.
Understanding a Fiduciary
A fiduciary relationship exists when one party has an obligation to help the other realize their best interests. When someone is a fiduciary, they’re supposed to make good financial moves that benefit whoever the beneficiary is. They aren’t going to be able to make moves that specifically benefit them. This means that a fiduciary financial advisor wouldn’t be able to recommend financial moves that will allow them to make more cash at the expense of the beneficiary.
You’ll often find fiduciary relationships in areas that require high trust levels. For example, board members at a company are always going to have a fiduciary obligation to the companies that they’re on the board of. You’ll also find that trustees have a fiduciary obligation to their beneficiaries. When someone sets up a trust fund, they’ll have a fiduciary make moves that are in the best interest of a beneficiary.
How Can You Find a Financial Advisor Who Is a Fiduciary?
Finding a financial advisor who is a fiduciary isn’t necessarily as easy as you would think. Financial advisors actually rely on customers to let people know whether they are fiduciaries or not. If you’re looking for a new financial advisor, then you can look up information about specific advisors to see what current clients have to say about them. You could also try to work with a certified financial planner because these professionals should have certification that is tied to a fiduciary duty.
Also, some people like to make use of robo-advisors because they are going to make objective moves that should be in your best interest. The prevalence of robo-advisors in modern times has made them a great option for people who are looking to invest. These robo-advisors do have limitations that can make them less desirable than a really good financial advisor, though. For instance, a robo-advisor might not be able to take your entire financial well-being into account due to being limited by the scope of its algorithm.