![]() Courts have linked the fiduciary duty of loyalty to the biblical principle that no person can serve two masters, “a maxim which is especially pertinent if one of the masters happens to be economic self-interest.” 6Ĭonsider circumstances in law and medicine that involve betrayals of trust, which is to say fiduciary breaches of the duty of loyalty. The most fundamental duty under the fiduciary standard is loyalty, the obligation to avoid conflicts or, in the case of unavoidable conflicts, mitigate them in a manner that serves the client’s best interests. Fidutuary and standard accounts professional#It is not an overstatement to say that fiduciary principles represent the natural order of things in professional relationships. The centrality and continuity of thinking about codes of conduct for people in special positions of authority since literally the origin of recorded legal history makes the fiduciary standard one of the oldest and most revered concepts in law. The term “fiduciary” originated in Roman law and means “a person holding the character of a trustee, or a character analogous to a trustee, in respect to the trust and confidence involved in it and the scrupulous good faith and candor it requires.” 4 3 In Roman times, the fiduciary standard began to crystalize and take a form easily recognized in today’s standard. This is not only economically inefficient, it also weakens the fiber of the community.īy the time Cicero spoke those words (roughly 135 BC), philosophers and rulers had been discussing relationships of trust and imposing codes of conduct for more than 1,500 years. If we cannot rely upon advisers to uphold and be accountable to high standards of professional conduct, then less qualified, non-professional members of society must fend for themselves. Cicero recognized that the adverse consequences stemming from betrayals of trust not only deal damage to the client but to society as a whole. The professionals we engage must act in our best interests. ![]() Reliance upon professionals for advice, or ceding discretionary control to them, makes us vulnerable and them accountable. These “friends” are close confidants uniquely qualified to act as stewards or trustees whom we engage to protect and manage that which we have entrusted to them. Additionally, we occasionally must place our affairs or assets under the control of professionals to manage on our behalf. We must rely on people who have the time, resources, inclination, and talent to achieve professional competence. Certain skills are beyond the reach of the average individual. For we cannot do everything ourselves different people are more capable in different matters.” 2 Failures by professionals through negligence or exploitation can have disastrous consequences to our health, our freedom, or our financial security.Ĭonsider this Cicero quote from more than 2,000 years ago: “…n cases where we ourselves cannot be present, the vicarious faith of friends is substituted and he who impairs that confidence, attacks the common bulwark of all men, and as far as depends on him, disturbs the bonds of society. 1 Much like a child is dependent upon parents for their physical safety and nurturing their growth as a person, a client is dependent on the skill and integrity of a professional adviser. Society has long recognized the importance-even sanctity-of such professional relationships of trust. ![]() Out of necessity, we make ourselves vulnerable to advisers so they can help us by applying their special skills on our behalf. When we go to a doctor, lawyer, or a financial adviser, we share information that we do not share with anyone else outside of the family-often not even within the family. But the depth and breadth of damage that can be inflicted from betrayals by professional advisers can be even more devastating. The most egregious breaches of trust by family members generally stand alone in their emotional impact. ![]() The more you trust someone, the more you can be hurt by them-emotionally, physically, financially, etc. The more personally invested you are in a relationship, the more you are likely to trust them. If you imagine circumstances under which each of these types of people could betray your trust, how consequential would their actions be? Who was it? An acquaintance? A merchant? A friend? A professional adviser? A family member? Think of a particularly painful experience of betrayal-when someone you trusted implicitly failed you. Have you ever felt betrayed? Of course you have, everyone has. He is a well-known speaker and author of numerous articles on the subjects of fiduciary responsibility and investment management. Aikin, CFP ®, CFA, AIFA ®, is executive chairman of fi360 and a recognized thought leader in the field of financial advice and fiduciary responsibility. Journal of Financial Planning: August 2016īlaine F. ![]()
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