1

fiduciary

noun fi·du·cia·ry \ fə-ˈdü-shē-ˌer-ē , -shə-rē , -ˈdyü- , fī- \
Updated on: 9 Nov 2017

Definition of fiduciary

plural fiduciaries
:one that holds a fiduciary relation or acts in a fiduciary capacity

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Recent Examples of fiduciary from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'fiduciary.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

Origin and Etymology of fiduciary


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fiduciary

adjective

Definition of fiduciary

:of, relating to, or involving a confidence or trust: such as
a :held or founded in trust or confidence
  • a fiduciary relationship
  • a bank's fiduciary obligations
b :holding in trust
c :depending on public confidence for value or currency
  • fiduciary fiat money

Recent Examples of fiduciary from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'fiduciary.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

Did You Know?

Fiduciary relationships often concern money, but the word fiduciary does not, in and of itself, suggest financial matters. Rather, fiduciary applies to any situation in which one person justifiably places confidence and trust in someone else and seeks that person's help or advice in some matter. The attorney-client relationship is a fiduciary one, for example, because the client trusts the attorney to act in the best interest of the client at all times. Fiduciary can also be used as a noun for the person who acts in a fiduciary capacity, and fiduciarily or fiducially can be called upon if you are in need of an adverb. The words are all faithful to their origin: Latin fidere, which means "to trust."

Origin and Etymology of fiduciary

Latin fiduciarius, from fiducia confidence, trust, from fidere — see fidelity


Financial Definition of FIDUCIARY

fiduciary

What It Is

A fiduciary is a person or entity responsible for managing a qualified retirement plan in accordance with the Employee Retirement Income Security Act (ERISA).

In a broader sense, a fiduciary is a person or entity responsible for acting in the best interests of others -- typically an investment client, a company's shareholders or a beneficiary.

How It Works

For example, let's say Company XYZ gets a 401(k) plan. The employees and the company contribute to the plan, which soon has $3,000,000 of assets. A named fiduciary, which works for the 401(k) administrator, is responsible for ensuring that the assets are invested according to the employees' wishes and that Company XYZ is matching the employee contributions as promised. The named fiduciary is not responsible for making Company XYZ happy -- it is responsible for making the 401(k) plan participants happy.

A trustee is a person or entity that has a fiduciary duty to another person or entity, called the beneficiary. The trustee holds cash, assets, or title to property for the benefit of the beneficiary. The trustee's job is to manage the assets in the trust appropriately and to ensure that they are disbursed in the best interests of the beneficiary.

The purpose of the board of directors is to make sure management is acting in the best interests of the shareholders. This is why the board of directors lays at the heart of the notion of corporate governance: It has a fiduciary duty to the shareholders, and only to the shareholders. This can be difficult, especially when the vast majority of information that boards receive about corporate performance comes from management.

Why It Matters

Fiduciary duty is one of the most revered and powerful aspects of the financial world. Fiduciary duty requires a person to act in the best interest of his or her clients, and when a named fiduciary does not do so, the consequences can involve civil or even criminal penalties.


FIDUCIARY Defined for English Language Learners

fiduciary

adjective

Definition of fiduciary for English Language Learners

  • : relating to or involving trust (such as the trust between a customer and a professional)


Law Dictionary

1

fiduciary

noun fi·du·cia·ry \ fə-ˈdü-shə-rē, -ˈdyü-, -shē-ˌer-ē \

legal Definition of fiduciary

plural fiduciaries
:one often in a position of authority who obligates himself or herself to act on behalf of another (as in managing money or property) and assumes a duty to act in good faith and with care, candor, and loyalty in fulfilling the obligation :one (as an agent) having a fiduciary duty to another — see also fiduciary duty at duty, fiduciary relationship — compare principal

2

fiduciary

adjective

legal Definition of fiduciary

1 :of, relating to, or involving a confidence or trust
  • a guardian acting in his fiduciary capacity
2 :of or relating to a fiduciary or the position of a fiduciary
  • a fiduciary bond

Origin and Etymology of fiduciary

Latin fiduciarius, from fiducia trust, transfer of a property on trust



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