The important role of a fiduciary requires a lot of trust in whoever takes the role. The job requires adhering to four general functions.
Anyone acting as a fiduciary should understand these responsibilities and how they will guide their actions and decisions.
1. Act in their best interest
Being a fiduciary means always putting the other person first. It is like a captain steering a ship, whose job is to make decisions that benefit the passengers on board. A fiduciary does the same with money by making choices that are best for the needs and goals of the person they are helping.
2. Carefully manage money
Think of a fiduciary as a careful gardener tending to a delicate garden. They nurture and protect the money under their care through making smart choices, just like the gardener provides care to each plant. By carefully managing the money, a fiduciary ensures it grows and thrives over time.
3. Keep finances separate
A fiduciary does not mix personal money with the money they manage for someone else. This separation ensures clarity and prevents any confusion about whose money is whose. It is like having two distinct paths. One is for personal expenses and one is for the person they are assisting.
4. Keep good records
Like a storyteller who meticulously writes down every detail of an exciting adventure, a fiduciary keeps detailed records of every financial decision and transaction. This helps track where the money goes and provides a clear picture of its management. Keeping good records ensures accountability and transparency.
Being a fiduciary is like being a trustworthy guide. It involves navigating a financial journey for someone else. The four functions of this role may sound simple, but they are the pillars of a commitment to responsibly managing and safeguarding someone else’s financial well-being.