What are fiduciary duties?

The duties of a business adviser can vary by situation, but may include following client wishes, protecting private data and keeping accurate records.

In California, fiduciaries can have a variety of titles, including attorney, banker, business advisor, real estate agent, accountant, financial adviser and mortgage broker according to The Balance. This person has the power to act on behalf of another when making monetary decisions having to do with a particular situation, which is usually outlined in a contract. In the business world, an adviser may be able to buy or sell stock in order to further the company's standings, for example. The duties of a fiduciary can vary by situation, but having a general understanding of the responsibilities can help a person better understand when there is a breach of fiduciary duty.

Follow client wishes

A person in the role of fiduciary must obey the instructions of the client in most situations. This means keeping the client's best interests as the focal point above the best interests of other parties, even the fiduciary him- or herself. For a business adviser, this usually means he or she will need to broker deals in a way that most benefits the company he or she works for.

When do the client wishes not need to be followed? If he or she wants to partake in illegal activities, the financial adviser does not have to follow the instructions. Similarly, if the client's wishes are not in keeping with the contract laid out, the adviser is not required to participate.

Protect client information

Financial advisers likely have access to a lot of private information about the business. If shared with the wrong people, this information could lead to the downfall of a company. A fiduciary must not disclose private data about business affairs. Even discussing the motivations of a client can be considered a breach of fiduciary duty because it may help competitors gain an advantage over the client's company. Someone with these responsibilities must use reasonable care to protect the financial interests of the business that employs him or her.

Keep accurate records

Keeping accurate financial records also falls into the category of fiduciary duties. Whenever a transaction is completed, the financial adviser must correctly report where all monies are appropriated. The records needed may depend on the particular business. Some companies may want monthly reports, while others may be okay with quarterly updates. The contract created should express what kind of documents and recordkeeping is expected from the business adviser.

In California, it is important for businesses and advisers to understand the role of a fiduciary, so both parties understand what might constitute a breach. If a broker neglects some of his or her duties, it may be beneficial to work with an attorney who is familiar with business litigation.