Fiduciary Duty
Definition
A legal obligation to act in the best interest of another party, typically applied to financial advisors, trustees, and fund managers.
Explanation
Fiduciary duty requires putting the client's interests ahead of the advisor's. This contrasts with the 'suitability standard' (which only requires that recommendations be suitable, not necessarily optimal). Key fiduciary requirements: duty of loyalty (avoid conflicts of interest), duty of care (perform thorough analysis), duty of good faith (honest communication). The SEC's Regulation Best Interest (2019) enhanced broker-dealer obligations but stopped short of a full fiduciary standard, creating ongoing debate.