What is Wealth Management: ‘Fiduciary’
Welcome to the What is Wealth Management podcast, where I take a topic that wealth managers love to use, but most of the general public has no idea what it means. I call it demystifying the world of wealth management.
These are quick stories about a term or expression that no doubt, you or people on your team, love to use. While I can’t stop you from using the term, I can help explain it. So this short podcast is for you – you can share this with your clients or prospects to help them make sense of the stuff we say all the time.
Today we are talking about the term “fiduciary”.
What Even Is a Fiduciary? (And Why Everyone Pretends It’s Obvious)
You’ve probably heard it before — in a commercial, on a website, maybe from your advisor over a slightly-too-confident cup of coffee:
"We’re fiduciaries."
Said with all the gravity of a doctor giving you a life-altering diagnosis.
And here’s the thing — it is important. It just doesn’t sound like it.
"Fiduciary" is one of those words financial professionals love to throw around because it sounds noble, smart, and frankly, a little mysterious. Like Latin for “you can trust me more than that other guy.”
Let’s take a quick trip through history to see how we got here:
The word fiduciary comes from the Latin fiducia, meaning trust or confidence — and that pretty much sums it up. At its core, a fiduciary is someone entrusted to act in the best interest of another. The concept has been around for centuries, originally rooted in Roman law.
Here's a quick timeline of how it evolved:
Ancient Rome: Fiducia referred to a legal arrangement of trust — like when someone handed over property to another person to hold temporarily for safekeeping. Think of it as the ancient version of, “Hold this for me, and don’t mess it up.”
English Common Law during the Middle Ages: The fiduciary concept developed in courts of equity, where certain relationships — like between trustees and beneficiaries — were held to higher ethical standards. Judges began holding people accountable not just for what they did, but whether they acted in good faith and in someone else's best interest.
Early America: The U.S. borrowed the idea from English law. Trustees, guardians, and certain business agents had “fiduciary duties.” Over time, this started to apply to financial advisors, corporate directors, and anyone managing assets on behalf of others.
1974: The Employee Retirement Income Security Act made it official for retirement plan advisors — requiring fiduciary responsibility when managing 401(k)s and pensions. This was a big moment in the financial world.
2010s: The term exploded into the public eye when the Department of Labor tried to expand the fiduciary rule to cover all financial advisors working with retirement accounts. The backlash? Fierce. Lawsuits flew. Politics got messy. Eventually, parts of the rule were rolled back — but the spotlight stuck.
So fast forward to today… and ask your average investor what it actually means, and you’ll likely get a shrug, a guess, or maybe: “Is that the thing with the taxes?”
So here’s the plain-English version: a fiduciary is legally obligated to put your interests ahead of their own. No shady commissions. No recommending products because they get a trip to Cabo. Just advice that’s actually built for you.
Simple, right?
And yet, many advisors don’t have to follow this standard. There’s a big gray area in finance — the “suitability” standard — where an advisor can recommend something that’s good enough, even if it’s not the best option for you.
That’s like a doctor prescribing a treatment that kind of works, but mostly earns them airline miles.
So… yes, “fiduciary” matters. A lot. Just don’t be fooled by how serious people sound when they say it. Ask what it means. Ask how they’re held to it. Ask who signs the checks.
“Fiduciary” is both a legal standard and a marketing buzzword. The irony? Something that started as a humble word for trust is now one of the most overused — and misunderstood — terms in finance.
Because when it comes to your money, trust is earned with clarity — not jargon.