Investment advisers owe a fiduciary duty to their clients. As such, an investment adviser stands in a special relationship of trust and confidence with its clients. As a fiduciary, an investment adviser has an affirmative duty of care, loyalty, honesty, and good faith to act in the best interests of its clients. The parameters of an investment adviser’s fiduciary duty depend on the scope of the advisory relationship and generally include the following duties:
- to place the interests of clients first at all times;
- to have a reasonable basis for its investment advice;
- to seek best execution for client securities transactions where the adviser directs such transactions;
- to make investment decisions consistent with any mutually agreed upon client objectives, strategies, policies, guidelines, and restrictions;
- to treat clients fairly;
- to make full and fair disclosure to clients of all material facts about the advisory relationship, particularly regarding conflicts of interest; and
- to respect the confidentiality of client information. This fiduciary duty differs from the suitability obligations that govern brokers.