You may have heard the debate over “suitability” versus “fiduciary duty” and wondered “What do those things even mean? Does it even matter?” Well I’m here to tell you: It does matter. It determines whose interest comes first: yours or your financial advisor’s.
So first off, what does it mean to have a fiduciary duty? In the simplest terms, a fiduciary duty is an obligation to act in the best interest of another party. A fiduciary relationship is one of complete trust and utmost good faith. In fact, the term fiduciary comes from the Latin words “fiducia” which means trust and “fides” which means faith. A fiduciary is expected to be extremely loyal to the person whom he owes the duty. (more…)