What is a Fiduciary?
A fiduciary is a person who holds a position of authority and trust with respect to another person or entity. Both board members and officers of a community association are fiduciaries with respect to the association. This means that the board members must act prudently, must exercise ordinary care, must exercise sound business judgment in the operation of a community association. This means no self-dealing between officers/directors and the association, no “sweetheart” deals, no kick-backs from contractors, etc. While an individual member of the association is not a fiduciary and may act in his or her own self-interest even if that interest is adverse to the association, a board member or an officer must put the needs of the association above his or her own personal interests.
Only certain financial professionals, such as CPAs and Registered Investment Advisors (RIAs), are subject to a fiduciary standard. By law, a Fiduciary will act solely in the best interest of the client. They must fully disclose any conflict, or potential conflict, to the client prior to and throughout a business engagement. Fiduciaries will also adopt a Code of Ethics and will fully disclose how they are compensated. Brokers, Registered Representatives, and Insurance Agents are typically not held to a Fiduciary Standard. The National Assocation of Personal Financial Advisors (NAPFA), of which Greenspring Wealth Management is a member, defines a fiduciary as “a financial advisor held to a Fiduciary Standard occupies a position of special trust and confidence when working with a client. As a Fiduciary, the financial advisor is required to act with undivided loyalty to the client. This includes disclosure of how the financial advisor is to be compensated and any corresponding conflicts of
