“Fiduciary” is an odd word. In law, a fiduciary is a person whom the law obligates to act solely on behalf of the person he or she represents and in good faith. The origin of the word comes from the Latin word “fiduciarius” meaning confidence and trust. The first known use of the word “fiduciary” was about the year 1641.
You may be wondering how the word “fiduciary” fits in a blog about personal finance. Just this: not all financial advisors are fiduciaries when it comes to their clients. That’s right. Your financial advisor may NOT be obligated to act solely on behalf of you or in good faith. If your financial advisor works for an insurance company or a big financial company like American Express, Edward Jones, Wells Fargo, RBC, Merrill Lynch, or Smith Barney, they are not fiduciaries. His or her first obligation is to do what’s best for their employer AND NOT YOU!
On the other hand, if your financial advisor is a fiduciary, she/he is legally obligated to work on your behalf and in good faith. Ask your advisor if she/he is a fiduciary. You might be surprised to find out for whom they work.
Note: the advisors at Juetten Personal Financial Planning, LLC. are fiduciaries and we have always taken this role.