A fiduciary duty is an obligation to act in the best interest of another party.  When a broker acts in a fiduciary capacity he or she is held to a high standard of honesty and full disclosure in regard to the client and must not obtain a personal benefit at the expense of the client.  With the passing of recent financial reform laws the existing standard of care by brokers may increase.

Currently brokers have a fiduciary duty to their customers mainly in the following situations, when:

• giving investment advice,
• making a recommendation (or solicitation) to buy any investment,
• disclosing material facts about the recommended investment,
• charging a fee based on the amount of assets to be managed (this is an ongoing fiduciary duty), and
• maintaining discretionary trading authority (this is an ongoing fiduciary duty).

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