A fiduciary is an investment adviser legally required to put a client’s interests first under the applicable fiduciary standard.
The word describes a relationship of trust in which one party must act for another’s benefit. In finance, fiduciary duties can include loyalty, care, fair dealing, conflict disclosure, and seeking appropriate advice or execution. The exact legal requirements depend on the country, adviser type, contract, and regulatory regime.
Fiduciary status is not the same as a guarantee of investment profits. A fiduciary can recommend an investment that later loses value, provided the recommendation and conduct met the relevant obligations. Advisers may also have conflicts, so clients should ask how the adviser is compensated and how conflicts are managed.
The term is broader than investing. Directors, trustees, guardians, and agents can also owe fiduciary duties. It is often confused with the suitability standard, which historically required certain financial professionals to recommend suitable products but did not necessarily impose the same broad duty of loyalty.