What is a fiduciary?

A fiduciary is an individual who is entrusted with the responsibility to act in the best interests of another party. This role requires a high standard of care and loyalty, as fiduciaries are expected to manage assets, make decisions, or provide services with integrity and good judgment.

Understanding the Principles of Fiduciary Duty

Individuals acting in a fiduciary capacity are expected to provide services according to five basic principles of fiduciary duty:

• Prudence: Exercising careful and sensible judgment in managing responsibilities and making decisions.
• Loyalty: Placing the interests of those they serve above their own personal interests.
• Exclusive Purpose: Acting solely for the benefit of the party to whom the duty is owed, with no conflicting interests.
• Diversification: Appropriately spreading investments or responsibilities to reduce risk and protect the interests of the beneficiary.
• Adherence: Following all applicable laws, guidelines, and governing documents relevant to the fiduciary relationship.