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A person or entity legally obligated to act in the best financial interest of another party, putting the client's interests above their own.
Fiduciary duty is the highest standard of care in financial services. Registered Investment Advisors (RIAs) are held to fiduciary standards, meaning they must recommend investments that are in the client's best interest, disclose conflicts of interest, and charge reasonable fees. By contrast, broker-dealers historically operated under a lower "suitability" standard, only needing to recommend investments that were suitable, not necessarily the best option. The SEC's Regulation Best Interest (Reg BI), implemented in 2020, raised the standard for brokers but still falls short of full fiduciary duty. Always ask your financial advisor if they are a fiduciary.