Fiduciary

 

Being of an age when everyone wants to help you invest what little shekels I have stored in my mattress. They will buy you dinner, put you up for a weekend at a beach resort, and make you fantastic offers if you just sign over you money for them to play with.

Along the way I heard the word ‘fiduciary’. fi·du·ci·ar·y. It is a funny sounding word. 

 

A fiduciary is a person or organization that acts on behalf of another person or persons, putting their clients’ interests ahead of their own, with a duty to preserve good faith and trust. Being a fiduciary thus requires being bound both legally and ethically to act in the other's best interests.

 

Overview. When someone has a fiduciary duty to someone else, the person with the duty must act in a way that will benefit someone else, usually financially. The person who has a fiduciary duty is called the fiduciary, and the person to whom the duty is owed is called the principal or the beneficiary.

 

By definition, a fiduciary is “a person who has the power and the obligation to act for another under circumstances which require total trust, good faith and honesty.” Fiduciaries are required to act in your best interest, regardless of what they stand to gain or lose.

 

Generally, you pay for financial advice in one of three ways: advisory fees for fee-only advisors, commissions, or a combination of fees and commissions for fee-based advisors. Fee-only advisors charge either a flat or hourly rate, on a per-service basis or as a percentage of assets under management.

 

Fiduciary risk – DFID defines fiduciary risk as the risk that funds are not used for the intended purposes; do not achieve value for money; and/or are not properly accounted for.

 

Working with a fiduciary ensures you’ll have the financial advice and guidance you need to adjust to life’s curveballs. Your adviser can help you fine-tune your adjustment strategy, account for changes in your circumstances and achieve major goals like buying a home or paying for your child's education.

 

What Is a Prohibited Transaction? A prohibited transaction is the improper use of IRA assets by you the IRA owner, your beneficiary or any “disqualified person.” A disqualified person includes: Any family member such as a spouse, ancestor, lineal descendant or their spouse.

 

One of the biggest arguments against the fiduciary rule is that it could unfairly impact smaller and independent retirement advisors, who might not have the ability to afford the costs of complying with the new regulations

 

 

Brokers: Are held to suitability standard. Under this standard, brokers can only recommend investments that they reasonably believe are appropriate for the given situation. Fiduciary advisors: Are held to stricter rules, known as the fiduciary standard of care.

 

Who do you trust? The church? The church should offer you caring advice but they are also a business for profit. You bank will promise to keep your money into safe and sound but they are in business to use your money to loan to others for interest. Even your lodge club members might mention a deal that made them money but if it doesn’t work out it is no sweat off them.

A few years back I saw LLC on the back of construction trucks. I had not seen that before. I’d used contractors before. I’d agree to an estimate for work requested and if the estimate had to be adjusted, we’d haggle for an adjusted price. There was no ‘money back guarantee’ but an understanding if the handshake agreement was not up to satisfaction, tweaks would be made for customer service.

The estimate presented was for materials, labor, and profit. Re-dos cut into profitability so now Limited Liability Company makes sense. At the same time it doesn’t assure the request to be quality workmanship.

 

How you handle your money is up to you. If you buy a house with hopes that it will appreciate with age is a crapshoot. The location may grow more valuable but the plumbing, electrical, roofing, foundation, chimney, etc. can flitter away whatever value is left.

 

I’m conservative with my funds. I do some minor philanthropy but am still rational enough not to fall for scams and skims. Make me an offer I can’t resist because you are a fiduciary and only working in my best interest and I’ll…