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Fiduciary status is determined by a number of facts and circumstances, but generally is defined as a person who manages property/financial funds for the benefit of another, who exercises discretionary authority or control over assets and/or acts in a professional capacity of trust regarding investment advice. When an investor gives their broker discretionary authority, that individual authorizes the broker to make investments without consulting the investor. If the broker has this discretionary authority or "control" over an investor's account that person may owe the investor a fiduciary duty. A broker with fiduciary responsibilities and duties must enter investment decisions with care and caution. Fiduciary liability is not determined by investment performance, but rather by whether prudent investment practices were followed by the investment advisor. Fiduciary duty is also highly associated with a moral compass comprised of honesty and integrity, because of the trust associated with this professional position. Following Security Exchange Commission (SEC) regulations/guidelines, investment advisors owe their clients an ongoing fiduciary duty to provide full and complete disclosure of all fees and any conflicts of interest. Brokers must exercise discretion in selecting investments, with only their clients' best interests in mind, including assessing the client's tolerance for risk and ultimate financial goals. To decide whether the broker should be held liable for advice, it is necessary to determine whether the investment advice was suitable for the client and whether the investment professional, bound to a fiduciary duty, acted in the client's best interests. All investment advisors should ask clients for complete documentation that outlines their risk profile and investment goals. Then the advisor is duty-bound to help ensure that the investment choices selected remain consistent with the outlined and agreed profile and goals. If any investment advice provided by a broker, that a client believes caused losses because it was inappropriate according to their personal investment profile/goals, should immediately contact legal advisors for guidance and direction. It is important to outline an individuals risk profile and financial goals because an investor may be compensated for monetary losses if a broker does not abide by the investor's profile. Article Source: http://www.articlewheel.com
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