The relationship of trust between a financial professional in yourself should be treated with the utmost respect and ensuring there has been no breach of fiduciary duty must always be a priority. Learn what exactly this breach is and how to protect yourself in the event of a breach to ensure your financials stay safe.
What is Fiduciary Duty?
Understanding “fiduciary duty” starts with identifying who a fiduciary is. In short, a fiduciary is a person or organization that accepts legal responsibility for upholding duties of care, loyalty, good faith, confidentiality, and more while serving in the best interests of a beneficiary. Examples of a fiduciary relationship can include financial advisers, attorney-client relationships, personal guardians, and more.
Fiduciary duty comes in a number of different parts, with the most predominant aspects of fiduciary duty being:
- Duty of Care: A fiduciary has a responsibility to inform themselves on relevant matters as much as possible to inform sound judgement when making decisions in a beneficiaries’ interest.
- Duty of Loyalty: A fiduciary has a responsibility to always act in the best interest of the beneficiary, and to remove themselves from decision-making when self-interest or conflicts of interest may occur.
- Duty of Confidentiality: A fiduciary has a responsibility to maintain confidentiality and may not use anything discussed for personal gain.
- Duty of Good Faith: A fiduciary has a responsibility to advance the interests of the beneficiary but must not act outside the confines of the law.
- Duty of Prudence: A fiduciary has a responsibility to handle matters and make decisions using only the highest level of skills, research, caution, and more on behalf of the beneficiary.
- Duty of Disclosure: Finally, a fiduciary has a responsibility to disclose any and all relevant information that may have an impact on a fiduciary’s actions.
As evident, fiduciary duty essentially ensures that all common fiduciary relationships keep the beneficiaries’ best interests at the forefront of the relationship at all times.
What Constitutes a Breach of Fiduciary Duty?
A breach of fiduciary duty claim is a troubling experience. Fiduciary acts require trust, and the idea that a fiduciary broke this trust can evoke fear. There are a few common examples of what may qualify when a breach of fiduciary duty occurs:
- When a fiduciary acts outside the interest of a beneficiary in a self-dealing manner
- A fiduciary reveals confidential information, such as trade secrets, financial information, or more
- Your fiduciary engages in malpractice
- A fiduciary act on behalf of a competitor using personal or financial information provided in your fiduciary relationship
There are more situations in which a fiduciary may breach their duty, but the underlying component is that a fiduciary acted outside of the best interest of the beneficiary.
How to Protect Yourself in the Event of a Breach
There are a few steps you need to take in the event of a breach of fiduciary duty. Depending on the severity of the breach, ending your relationship with the fiduciary may be enough to rectify the breach after reporting what they had done. However, if the breach warrants legal action, gather information and proof of the breach of fiduciary duty prior to seeking legal advice.
By seeking a law firm that specializes in fiduciary breaches, you may be eligible to receive awards for punitive damages and more. Always understand that if a fiduciary fails in their duty of acting in the interest of the beneficiary, there may be legal recourse that you can consider.
Protect your finances today
By working with us here at Royal Oak Financial Group, you can rest easy knowing our certified fiduciary financial advisor, Matt Jehn, will always hold your best interests at heart. With services ranging from estate planning, individual tax planning, investment management, and income and social security planning, there is no shortage of ways in which we can help. Please reach out and contact us today or visit us if you are in the Ohio area to discuss your financial needs.
