Fiduciary License Agreement

If you are thinking of setting up a trust or working with a financial advisor, then you may have heard the term “fiduciary license agreement” being thrown around. It sounds like a complex concept, but it is important to understand what it means and how it can affect your financial future.

In simple terms, a fiduciary is a person or entity that has a legal obligation to act in the best interest of another party. When it comes to financial matters, a fiduciary typically refers to someone who is managing assets on behalf of someone else, such as a financial advisor.

A fiduciary license agreement is a legal document that outlines the responsibilities and obligations of the fiduciary, as well as the expectations of the party that is entrusting their assets to them. The agreement may cover topics such as investment strategy, risk management, and fees.

One of the main benefits of working with a fiduciary is that they are legally obligated to act in your best interest. This means they must put your needs ahead of their own when making investment decisions. This can provide peace of mind and help ensure that your financial goals are aligned with the actions of your advisor.

In contrast, a non-fiduciary advisor may be focused on selling certain financial products or generating commissions, which may not necessarily be in your best interest. This can create conflicts of interest and potentially lead to poor investment decisions.

When working with a fiduciary, it is important to carefully review the fiduciary license agreement before signing. Make sure you understand the scope of the agreement, including any limitations or restrictions on the advisor`s actions. You should also review the fees and compensation structure to ensure they are transparent and reasonable.

Overall, a fiduciary license agreement is an important tool for protecting your financial interests and ensuring that your advisor is working towards your goals. By working with a fiduciary, you can have confidence in your investment strategy and focus on achieving your long-term financial objectives.