LANSING, Mich. (WLNS) – Ever heard someone reference a “fiduciary advisor” and wondered what it meant? Local money expert Stephen Schiestel breaks it down on this week’s Money Monday.
“I think the key thing is to understand what are the obligations that go along with a fiduciary,” said Schiestel.
First, a fiduciary must be loyal to their employer.
A fiduciary acts in their employer’s best interest. Their job is to protect the portfolio and maximize profits.
They are also tasked with diversifying portfolios.
Schiestel uses Gamestop as an example, saying that if a client’s portfolio is all in Gamestop stocks, then the fiduciary must diversify.
The third duty, Schiestel said, is to properly manage the expenses and costs of the portfolio.
This, again, must be done with the best interest of the portfolio in mind.
A fiduciary also oversees a portfolio, making changes if necessary.
Fiduciaries also must disclose any conflicts of interest.
“Sometimes it’s difficult when you have to parties for there is zero conflicts,” said Schiestel. “If I’m hiring a fiduciary I need them to identify to me where those conflicts are, and therefore I can decide if this is a relationship I want to continue.”
Many fiduciaries are working in trust banks or wealth management departments, or a registered investment advisor. By law, these groups are acting in a fiduciary capacity.