Are There Any Fiduciaries in Japan for American Investors?

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Living as a foreign person in Japan comes with a variety of challenges, no matter your country of origin.Fiduciaries in Japan for American Investors Financial planning is no different, as you have to navigate the systems of multiple countries. In particular, Americans living in Japan face obstacles that can make investing seem like an impossible task. However, there are also many financial opportunities for American investors in Japan. But how do you determine what investments may reap the greatest rewards and avoid pitfalls such as double taxation? If you’re not sure, it may be time to talk to a fiduciary.

What is a Fiduciary?

What is a Fiduciary? Fiduciary Japan American InvestorsA fiduciary is a person who manages the affairs of another person, a company, or a nonprofit organization. They can be appointed by a court of law, or they can be appointed by the client themselves. In the case of personal finance, a fiduciary usually takes the form of a financial advisor hired by an individual to help him make financial planning and investment decisions.

Fiduciaries have a “duty of care”, meaning they have a legal and ethical responsibility to act in the best interests of their clients. They are required to act with loyalty and impartiality and must avoid conflicts of interest. This means that they cannot make decisions that benefit themselves over their clients.

The work of a fiduciary may involve managing assets on behalf of another person. This may include investing money and purchasing property. A fiduciary also has a legal responsibility to ensure that their advice and actions are for the demonstrable benefit of his or her client(s) at all times.

What’s the Difference Between a Fiduciary, a Financial Advisor, and a Broker?

What is a Fiduciary, Broker, Financial Advisor? Fiduciaries in Japan for American investors

You’ve probably heard the term “Broker” thrown around in the financial world. But what does it mean? Is it the same thing as an advisor or fiduciary? While you can find all of these services in Japan, the differences lie in their specific functions and responsibilities.

The word “broker” comes from two words: “buy” and “sell.” A broker is someone who helps other people buy and sell things like stocks, bonds, real estate, or even insurance policies. A broker might work for themselves or for an investment firm. Brokers are not considered fiduciaries, because they don’t give advice about specific investments; they just provide a transaction service to clients, or access for clients to make trades on their own (or through an automated platform).

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The terms “Fiduciary” and “Financial Advisor” are often used interchangeably. However, while their professional functions overlap, not all financial advisors maintain the fiduciary “duty of care”. A financial advisor provides advice about investments and other financial matters, but may not always be legally required to act in your best interests. A fiduciary often performs the same duties, but with the added stipulation that they are legally required to act in your best interests in all areas of the service being provided to you.

What Are the Benefits of Using a Fiduciary in Japan For American Investors

Fiduciary financial advisors are held to a higher standard than non-fiduciary advisors. Because of this higher standard, working with a fiduciary comes with a number of benefits that a non-fiduciary financial advisor may not be able to offer:

benefits of using a fiduciary for American investors in Japan - Japan fiduciaries

  • -They must act in your best interest, and they cannot sell you products or services that have higher fees or lower returns than other options.
  • -You can rest assured that your financial adviser has no conflict of interest—they’re not going to recommend anything that would benefit them more than you or any company they work for instead of you as an individual client.
  • -You’ll know exactly how much advice costs because fees will be clearly defined and transparent from the start. There won’t be any hidden costs or charges for extra services (like commissions). The only charge will be for actual advice given by experts who understand the unique needs of each client.
  • -If you are not working with a fiduciary, there is no guarantee that your advisor has your best interests at heart. They may be incentivized to sell certain products over others, even if those products carry more risk or higher costs.

For American investors in Japan, using a fiduciary is particularly important because you’re living and investing in a foreign country, where you may not be as knowledgeable about investment options. A fiduciary will help you avoid the pitfalls of unprofitable investments in a foreign market.   

Are There Fiduciaries in Japan for American Investors?

Although investing in international markets can be intimidating, Americans in Japan can seek financial advice. Not all financial advisors in Japan have the fiduciary duty of care, so it’s important that you inquire about this specification before working with anyone purporting to be a “financial planner”, “investment advisor”, or “financial advisor”. An expert fiduciary can help you establish an investment portfolio optimized to your specific needs and goals. Don’t leave your international investments to chance. Find a financial advisor with a fiduciary duty of care and you’ll be able to rest easy knowing your finances are in good hands.

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Sources and Further Reading

-Fiduciary Obligations in Business (2021), ed. Arthur B. Laby, Jacob Hale Russell

-The Global Expatriate's Guide to Investing: From Millionaire Teacher to Millionaire Expat (2014), Andrew Hallam.

-The Oxford Handbook of Fiduciary Law (2019), ed. Evan J. Criddle, Paul B. Miller, Robert H. Sitkoff