Someone who owes a duty of loyalty, good faith and scrupulously honest dealing to another (i.e., a fiduciary duty.) Usually a fiduciary must act always in the best interests of the party that it owes a duty to, usually at a higher priority to the fiduciary’s own interest. Among those who typically owe a fiduciary duty are directors and officers of a company, lenders to borrowers, lawyers to clients, agents to principals and sometimes promoters to investors. A fiduciary should also generally avoid or disclose any conflict of interest it may have to the party to which it owes the fiduciary duty, or otherwise make sure that the party is aware of the conflict.

An unfortunate public tendency exists to assume that certain persons have fiduciary obligations where none in fact exists.  This is most apparent with respect to financial and investment advisors, but is a common assumption by lay-people with respect to the financial sector as a whole.

Related Terms