Due to my mother's birthday celebration and another Saturday spent preparing year-end spreadsheets for my company's upcoming audit, all I have time for is a short question from Jenna:
What does fiduciary mean?
According to the Dictionary of Finance and Investment Terms, a fiduciary is a person, company, or association holding assets in trust for a beneficiary. The fiduciary is charged with the responsibility of investing the money wisely for the beneficiary's benefit. Some examples of fiduciaries are executors of wills and estates, receivers in bankruptcy, trustees, and those who administer the assets of underage or incompetent beneficiaries.
In addition, administrators of employee benefit plans (especially retirement plans) are considered fiduciaries.
One of the central duties of a fiduciary is to act prudently. Fiduciaries through their actions, or inactions, motivated by, or through ignorance or neglect, may be held personally liable if they breach their duties. Furthermore, fiduciaries should be aware of the actions of co- fiduciaries, since fiduciaries have potential liability for the actions of fellow fiduciaries.
My boss and the chairman of our company are the administrators of our company's 401(k) plan both take their fiduciary responsibility seriously and are well aware of the risk involved. Neither will offer investment advice nor would issue any type of "Stay the course" memo during the most recent stock market decline.
For a more in depth discussion on the definition of a fiduciary please read this article - What is your fiduciary IQ?
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