Fiduciary duties include:
- Duty of care: The fiduciary has sound judgement based on helping the best interests and reasons for the client.
- Duty of loyalty: The fiduciary always puts the client’s wellbeing first whether it be about their financial or their personal situation.
- Duty of good faith: The fiduciary must abide by the law and never pursue legal actions when helping the beneficiary or client.
- Duty of confidentiality: The fiduciary must take due care to protect the client’s privacy and confidentiality.
- Duty of prudence: Fiduciaries must utilize their professional skills, caution, and awareness of risk to make decisions in the interest of the beneficiary.
- Duty to disclose: Fiduciaries must display forthright behaviour when disclosing relevant information in the best interest of the party in their care.
There are multiple types of fiduciary relationships, such as:
- Trustee/beneficiary
- Guardian/ward
- Agent/principal (in the business and education sectors)
- Attorney/client
- Company/stockholder
- Physician/patient
- Board of directors/non-profit organization
Not all financial advisors are held to a fiduciary duty, however. For example, some commissioned investment dealers may suggest investments to clients that earn the dealer the highest fees, giving rise to a potential conflict of interest. Certain professional designations in Canada such as Certified Financial Planner and Chartered Investment Manager require their accredited members to have a fiduciary duty.
Example: “Sara was looking online for a certified planner with CFA or QAFP credentials to ensure they had a fiduciary duty with respect to her finances.”
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