What Is An Investment Fiduciary?

By Mark Barnicutt on November 17, 2010

At HighView Financial Group, we are very open in stating that we are a fiduciary of the client assets that we manage.  As the concept of “fiduciary” is being discussed more in the media, we believed it was important to address this concept.

We view a “fiduciary” as someone acting in a position of trust on behalf of, or for the benefit of, a third party.  This is the view of fi360, a US based organization that has developed a set of practice standards for investment fiduciaries.

For this reason, an investment fiduciary is typically held to a higher standard of care than someone who is not a fiduciary.

According to fi360, though, the following considerations are important:

–Fiduciary status can be difficult to determine, and is based on “facts and circumstances”.

–In general, the issue is whether a person has effective control or substantial influence over investment decisions.

–It is not uncommon for fiduciaries to be unaware of their status.

In Canada, we’ve always known specific wealth management roles – such as trustees and discretionary investment money managers (such as HighView and the investment managers that we engage) — to be fiduciaries.  The grey zone is for broker-dealers and other advisors such as Financial Planners. With the rising standards of care from both clients and regulators, the fiduciary definition is receiving growing discussion and debate in our industry, as the article earlier this year in Advisor.ca highlights.

At HighView Financial Group, we believe that with the growing affluence of our society, combined with the rising complexity of wealth management issues and the trusted role that wealth management advisors perform in client’s financial lives, that it’s time for regulators to re-examine the application of fiduciary standards to various wealth management roles.

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