What does the fiduciary standard impose upon fiduciaries?
The fiduciary standard applies a “Portfolio Standard of Care,” which requires that a fiduciary exercise reasonable care, skill and caution when making investments.
- The Portfolio Standard of Care applies to the portfolio as a whole rather than to each individual investment.
- The fiduciary standard generally requires a fiduciary to diversify investments unless it is not prudent to do so under the circumstances.
- The fiduciary standard allows a fiduciary to delegate investment functions when prudent as long as he/she exercises caution in selecting an agent and the agent is then periodically monitored.
- The fiduciary standard holds a fiduciary with special skill or expertise to a higher standard of care.