The Fiduciary Standard requires certain parties to act in the best interests of their clients. The fiduciary standard applies to Registered Investment Advisors (RIAs), CFP® professionals, trustees, employers with qualified plans, and others. Following are key fiduciary obligations in the financial industry:
1. Loyalty: Fiduciaries must act with loyalty and balance any conflicts of interest appropriately.
2. Disclosure: All relevant details, expenses, and conflicts of interest should be adequately disclosed.
3. Integrity: Information must be presented with utmost honesty and clarity. Any efforts to deceive, defraud, or mislead are strictly forbidden.
4. Competence: Recommendations should reflect thorough knowledge and research. A fiduciary also must recognize any professional limitations and consult outside professionals as needed.
5. Suitability: Suggestions must reflect the client’s situation and preferences. Circumstances, goals, and risk tolerance are important factors.
6. Diligence: Fiduciaries must perform skillfully and address client inquiries promptly.
7. Oversight: Each client’s situation should be monitored. Fiduciaries review and revise recommendations as circumstances evolve.
8. Confidentiality: Fiduciaries are required to safeguard client information and maintain client confidentiality.
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