For an individual and/or a business to represent themselves as a fiduciary is there a process to do so? Is there an organization that formally provides accreditation? Or is anyone free to represent themselves as a fiduciary?
IANAL.
In the financial field, Registered Investment Advisors (RIAs) or Investment Adviser Representatives (IARs) must register with the SEC or state securities regulators and pass exams like the Series 65.
In general, some states, but I don’t think all, require a specialized state license to act as a professional, non-family fiduciary. That is, you can serve as a fiduciary for an aging parent with no license, but not for unrelated people.
But, does holding a license/certification make someone a “fiduciary”? There is some financial firm running ads on TV (Fisher?) clearly proclaiming in each ad that they are “a fiduciary” with some gravity/implied importance, as if other competing financial firms may not be. A friend of mine who works in the financial industry scoffs at their claim - essentially everyone of any size in the industry is a fiduciary.
To the OP question - an exam must be passed/some bar must be clear for one to become an investment advisor/representative, but is there any such test for claiming to be a “fiduciary”?
In law, “fiduciary” means a particular type of legal duty that a person can owe to another person; it’s the strictest standard of private law duty there is. Essentially, a fiduciary is obliged to subordinate his personal interests under those of the principal he owes the duty to in case of conflict. The standard examples are the relationship between a trustee and the beneficiary in trust law, or between a director and the company in corporate law.
Starting from this legal meaning, the word “fiduciary” has got extended to all sorts of setups whereby one party manages the assets of another. This requires regulatory permission if done by way of business, but I don’t know if there is a class of licensable activity styled “fiduciary”.
This must not be true because a financial advisor I know boasts that he has fifty ways to avoid answering the question “Are you a fiduciary?”
And he has licenses to sell insurance (annuities) mutual funds, securities, you name it.
I think of you have certain types of certifications (CFP is one, I believe) where you commit to being a fiduciary, but not just from getting most government issued licenses.
All very interesting as we are considering a fiduciary as a Successor Trustee to our family trust. Too bad there isn’t a test for honesty.