A fiduciary standard is one of the highest professional levels of care that an adviser can enter into with a client. The five core principles of a fiduciary standard are:
1. Put the client's best interest first
2. Act with prudence - the skill, care, diligence and good judgment of a professional
3. Do not mislead the client. Provide conspicuous, full and fair disclosure of all important facts. This usually means tells the client from where you receive compensation, for what reason and how much money you will be paid.
4. Avoid conflicts of interest
5. Fully disclose and fairly manage in the client's favour any unavoidable conflicts.
There is currently a significant debate underway in the US at this time whether all financial advisers should be held to a fiduciary level of care or simply a higher commercial standard. As of July 2010 the SEC has 6 months to prepare and provide report to the US House of Representatives. Click here