A fiduciary is an entity either an organization or person that acts on behalf of a person or another individual with the purpose of managing assets. In essence, fiduciary owes to that entity the responsibilities of trust and good faith.
Fiduciary may be in charge for the overall wellbeing but typically involve tasks related to finances similar to the following:
- Managing assets of another individual
- Managing assets for group of individuals
From financial advisors, accountants, bankers, executors, money managers, board members as well as corporate officers, all of them have fiduciary responsibility.
The Duties and Responsibilities of Fiduciary
The duties or responsibilities of a fiduciary are both legal and ethical. When a party accepts the fiduciary responsibility on behalf of another entity, they’re expected to act in best interests of principal, the party in which assets they manage.
This is otherwise known as prudent person standard of care. This standard has been in existence and followed since 1830.
The formula of prudent person rule will require a person to act as fiduciary to act first and above everything else, with needs of beneficiary into account. Strict care has to be taken into consideration to guarantee that there’s no conflict of interests will arise between the client and the fiduciary.