Fiduciary duties and the role of board oversight in corporate strategy

Fiduciaries are individuals or organizations legally obligated to act in the best interests of their clients, shareholders, or customers. This duty applies to various roles, including attorneys, bankers, accountants, and company board members. In the financial sector, professionals such as Certified Financial Planners (CFP) are held to a fiduciary standard, which differs from the suitability standard. Clients are often responsible for verifying whether an advisor holds fiduciary status.

At the corporate level, fiduciary boards focus on ensuring long-term value creation through the oversight of risk and strategy. A KPMG survey of nearly 600 private company directors indicates that board effectiveness in overseeing strategy and performance has improved, with 70% of respondents reporting increased effectiveness since 2020. Independent directors are increasingly valued for their ability to advise on strategy and serve as sounding boards for executives.