A fiduciary relationship is a relationship of trust where one party (the fiduciary) is legally obligated to act in the best interest of another party (called the beneficiary), putting the beneficiary’s interests above their own. The fiduciary must exercise loyalty, honesty, and utmost care in managing the beneficiary’s affairs.
For example, a financial advisor has a fiduciary relationship with their clients. The advisor must provide unbiased advice, prioritize the client’s financial goals, and act in their best interest, even if it means recommending investments that may not be beneficial for the advisor.
Very Simple Definition:
A fiduciary relationship is a special type of relationship where one person has to do what is best for another person, even if it means not benefiting themselves.
For example, a lawyer has a fiduciary relationship with their client. They have to work in the client’s best interests, even if means taking action that is not beneficial to the lawyer.