Investment companies are fiduciaries when they manage assets on behalf of a customer. A fiduciary is an individual or institution that has a legal responsibility to act in the best interest of another party.
The Securities and Exchange Commission defines a fiduciary as someone who is required to act in the best interests of its clients, and must disclose any conflicts of interest. The term “fiduciary” is sometimes used solely to refer to a fiduciary relationship with respect to assets, as in the case of a trustee or administrator for the benefit of an individual or entity. However, it has broader usage and is applied to a professional who exercises business judgment on behalf of another person or entity. Fiduciaries can provide services, such as investment advice, that are subject to regulation by governing authorities. Examples of fiduciaries include lawyers,