What’s the Value of a Fiduciary?

A fiduciary is a person or organization that owes another the duties of good faith and trust. The term is often used to describe a person who holds a legal or ethical relationship of trust with one or more other parties (a person or group of persons). A fiduciary is expected to act selflessly, and in the best interests of the person or party they represent.

In financial management, a fiduciary is a person or organization that manages assets on behalf of another person or organization. This can include tasks such as investing money, managing assets, and making financial decisions on behalf of the other party. A fiduciary is expected to act with integrity and to put the interests of the other party ahead of their own.

For example, in my previous life, I worked for a large brokerage house.  While it was an excellent learning environment, I believe it was the things I saw, heard, and observed first-hand helped me understand the actual application of Fiduciary behavior.  Consequently, it had the biggest impact on my choice to start my own practice as an independent advisor vs. the firms recruiting me –for what appeared to be the same role of salesperson.  A role I was desperately trying to get away FROM. 

When I worked at “Big Box Bank Brokerage,” Management always talked about “helping the customer” and “doing what’s right,” but in an Orwellian double-speak way it was all about “helping the customer buy more of OUR house-branded products.”  At that time the House Brand was both limited in its offerings and truly average or pedestrian at best in terms of quality or competitiveness. 

In one instance during a performance review my sales manager lamented that “Craig, you have the highest referral rating of an of our advisors across the entire state, but what we need you to do is spend less time with your clients and focus on generating more sales.  The other half of that discussion was, “We need you to move from selling the House Brand 5% of the time to closer to 50%.  Preferably more.”  This was despite my high customer service marks and exceeding all the written goals my sales manager had laid out for me.  I would have loved to have seen my face when he made that statement!  It sounds just as stupid and insidious as it does when you read it here on the page.

In summary, a fiduciary is a person or organization trusted to act in the best interests of another party, and is held to high ethical and legal standards in carrying out this role.

If you have more questions about how a fiduciary relationship may benefit you, please contact us.