A registered investment advisor is clearly a fiduciary, by function or by law. The Investment Advisors Act of 1940 defines an investment advisor as a fiduciary whose duty is to serve the best interests of its clients, including an obligation not to subordinate clients’ interests to its own. Included in the fiduciary standard is not only the duty of loyalty, but also due care.

Loyalty

Chao & Company embraces the fiduciary culture and understands the delicate nature of trust and the fiduciary relationship. An investment advisor that has a material conflict of interest must either eliminate that conflict or fully disclose to clients all material facts relating to the conflict. As a fiduciary to our investment clients, our policy is to simply avoid conflicts so that divided loyalty is never an issue.

“Those entrusted are in the position of power, and as fiduciaries, they have a duty to carry out their actions in good faith with undivided loyalty and due care.”

Due Care

To serve as an investment fiduciary, it is not enough just to serve in the best interest of our clients and to demonstrate good faith. The element of due care is also owed. This duty requires us to perform in a like-kind manner of a similarly situated prudent expert. We must take reasonable steps on a best effort basis to research, analyze, enquire, and verify our investment due diligence process and to challenge our own thinking and conventional wisdom. Our clients leave their properties in our care, and in turn, we must deliver the highest standard of practice and diligence so that their best interests are served.

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