When an individual decides to invest their money, whether in a bank, stock market, retirement plan, etc., they entrust it to an individual who must abide by legal responsibilities and duties, which are considered good faith and candor. Additionally, these responsibilities are also known as fiduciary duty.

Fiduciary status is determined by a number of facts and circumstances, but generally is defined as a person who manages property/financial funds for the benefit of another, who exercises discretionary authority or control over assets and/or acts in a professional capacity of trust regarding investment advice.

A broker with discretionary authority has the client's authorization to make investments for the client without consulting the client. If the broker has this discretionary authority or "control" over an investor's account that person may owe the investor a fiduciary duty. A broker with fiduciary responsibilities and duties must enter investment decisions with care and caution.

Determining fiduciary liability is comprised of prudent investment practices by the fiduciary rather than overall performance. However, because of the degree of trust reposed in a fiduciary, a fiduciary is generally held to a very high standard of honesty and integrity within the scope of the relationship. Full and complete disclosure of any fees, conflicts of interest, etc., are required by an investment advisor as per the Security Exchange Commission (SEC) mandatory regulations. Part of a broker's responsibility is to individually assess a client's available risk and monetary goals when determining investments.

To decide whether the broker should be held liable for advice, it is necessary to determine whether the investment advice was suitable for the client and whether the investment professional, bound to a fiduciary duty, acted in the client's best interests. All investment advisors should ask clients for complete documentation that outlines their risk profile and investment goals. Then the advisor is duty-bound to help ensure that the investment choices selected remain consistent with the outlined and agreed profile and goals.

If any investment advice provided by a broker, that a client believes caused losses because it was inappropriate according to their personal investment profile/goals, should immediately contact legal advisors for guidance and direction. It is important to outline an individuals risk profile and financial goals because an investor may be compensated for monetary losses if a broker does not abide by the investor's profile.