O'Reilly Wealth Advisors

(760) 804-0910
roadmap@oreillywa.com

Fiduciary

A fiduciary is one, often in a position of authority, who obligates himself to act on behalf of another (as in managing money or property) and assumes a duty to act in good faith and with care, candor and loyalty in fulfilling the obligation.”
Merriam Webster

Why is a Fiduciary Important?

For a couple or individual, it is important because a fiduciary is called by law to always put your interests ahead of theirs. They have a much higher level of responsibility to you than other financial entities like brokers, insurance agents or banks. It doesn’t mean that your broker is a bad person or doesn’t care. It does mean, however, that their environment and regulations tend to influence their loyalty away from you not towards you. Fiduciaries also have much higher disclosure requirements. If you hire a non-fiduciary, then you need to watch their fees like a hawk – hidden fees are the norm. Often they are not as easy to understand. Often they penalize by charging a front loaded excess fee, or a penalty fee for leaving them. This is your life and your money, so be firm and do not be afraid to ask questions. If they really care, they will welcome your questions.

For someone in a leadership role in a company or non-profit, you want to act with fiduciary standards of care for two reasons.

  1. A fiduciary position is one of great responsibility since your decisions affect others assets, that should not be taken lightly. Examples are 401(k) plan overseers or those serving in an oversight role for a foundation. Ideally you are motivated by the responsibility and because you care about achieving a good result (and avoiding a bad result).
  2. A person in a fiduciary position can be held personally liable legally. Certainly most people would never want to be in a position where they could be liable for problems or even remotely close. Most would want to be so “squeaky clean” that any lawsuits that could come along would be considered by the court as “frivolous”.

What are the risks?

There are many examples of executives and board members being held personally liable for investing related problems. We suggest consulting your corporate or personal attorney to determine your actual risk. Though various types of insurance can be used as protection, we would suggest that you don’t ever want to come even remotely close to needing that insurance. (The insurance is a good idea, but should not be your reason for not operating at a higher level of fiduciary care.)

How to minimize risk? Simply, be a great fiduciary — Fiduciary Excellence! But how? Let us show you how you can achieve fiduciary excellence.