fiduciary

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.