Why Fiduciaries Must Put Your Financial Interests Above Their Own
Certain professionals must act as fiduciaries when handling money, assets, or property for others. This legal and ethical duty applies to roles like financial advisors, attorneys, and trustees. In Germany, trust companies and asset managers are also bound by these strict obligations.
A fiduciary relationship arises when someone is entrusted with managing another person’s finances or assets. This includes providing advice, negotiating deals, or overseeing investments. The fiduciary must always prioritise the client’s best interests—even if a different choice would benefit them personally.
Fiduciaries have two key duties: care and loyalty. The duty of care means making informed decisions based on available facts. The duty of loyalty requires putting the client’s needs first, avoiding conflicts of interest. For example, recommending an investment that profits the advisor more than the client would breach these duties. Breaches can lead to serious consequences. If a fiduciary fails to act in the client’s best interest, they may face legal action. Common fiduciary roles include financial advisors, estate executors, and corporate directors. In Germany, bank trustees and legal asset managers also fall under these rules. Before entering such a relationship, it’s essential to confirm whether the professional is legally bound as a fiduciary. Not all advisors or agents have this obligation, so clarity upfront prevents misunderstandings later.
Fiduciaries must follow strict legal and ethical standards when managing others’ assets. Those who fail to meet these obligations risk lawsuits or financial penalties. Understanding these duties helps clients choose trusted professionals for their financial or property needs.
