The wealthier the investor, the more likely that investor is to understand the meaning of a fiduciary relationship, according to Spectrem research on investors and their relationship to their advisors.

Spectrem’s research report Relationships with Advisors reveals that 90% of Ultra High Net Worth investors (with a net worth between US$5 million and US$24.9 million Not Including Primary Residence) claim to understand the meaning of a fiduciary relationship.

Seventy-eight percent of Millionaires (with a net worth between US$1 million and US$5 million NIPR) understand what a fiduciary relationship is but only 57% of Mass Affluent investors (with a net worth between US$100,000 and US$1 million NIPR) report that they have knowledge of what a fiduciary relationship is.

In the case of Mass Affluent and Millionaire investors, an understanding of a fiduciary relationship increased with age and wealth level.

What is a fiduciary relationship and why is it important to investors? According to, a fiduciary is ‘a person or business that has the power and obligation to act for another under circumstances which require total trust, good faith and honesty.’

A fiduciary manages the assets for the benefit of the other person rather than for his or her own profit. This is known as ‘fiduciary duty’.

The casual retail investor may take it on faith that their financial advisor or financial services provider would be working in their best interests.

Technically, though, this fiduciary standard only applies to financial advisors. Broker-dealers are not bound by federal law to a fiduciary duty, but are required to give ‘suitable’ investment advice and to disclose any conflicts of interest to a client.

While the wealthiest investors are more confident in their knowledge of what a fiduciary is, across all wealth levels there seems to be a general understanding of the components of a fiduciary relationship. The highest percent of Mass Affluent, Millionaire and Ultra High Net Worth investors said it involves ‘a relationship involving the care of assets.’

The second highest percentage said it is a legal or ethical relationship. A majority also consider a fiduciary relationship to be one based on ‘confidence, good faith and trust.’