Understanding fiduciary duty, your pension and your investments

It's common knowledge for most people that putting your money to work making more money is smarter than just sitting on financial assets. After all, inflation will decrease the buying power of your savings over time. As prices and wages increase, the same amount of money buys less. Investing your retirement fund or pension can be a great way to offset the decrease in purchasing power over time.

Unfortunately, investing money you depend on for your retirement also poses risks. You could end up losing some or even all of the money you've saved. While it's tragic when your own poor investment choices result in a loss, it's worse when it's caused by someone else.

Account managers and investment advisers profit from your investment

Those who work in financial services pay themselves well. Generally, they make a salary as well as bonuses. They could get paid extra when a fund performs well or when they convince more people to sign up with their investment program. When you invest with a company or your pension gets invested by your employer, the person managing that money is profiting from your investment.

Unfortunately, these people can make mistakes as well. Those mistakes can cost you hundreds or thousands of dollars. In extreme cases, a mistake with your retirement investments or pensions could even cost you the ability to retire as planned. You may have to continue working for years or for the rest of your life after a major investment mistake.

What is violation of fiduciary duty?

The people you trust to manage a pension or investment account owe you what gets called fiduciary duty. Essentially, this is an obligation to act in your best interest. Fiduciary duty occurs when you place professional or financial trust in someone to act in your best interest.

Investors don't always do right by their clients. They may have an opportunity to sell an investment at a loss that profits them as an individual or benefits other clients. Sometimes, they invest in questionable companies or funds because they are owned or managed by a friend or family member.

Know your options with investment issues

When investments get made for any reason other that your best interest, the person making that decision has violated his or her fiduciary duty to you, the investor. When that happens, you may be able to take legal action against the individual or the company that was responsible.

It can be a drawn-out and complicated process, but the end result could be full or at least partial recovery of the funds you lost as a result of someone else's mistake or corruption. You've spent years amassing your retirement funds or pension. It shouldn't just disappear because someone violated one's obligation to do right by you.

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  • United States District Court | District Of Arizona
  • Maricopa Country Bar Association
  • State Bar Of Arizona
  • United States Court Of Appeals | Ninth Circuit

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