According to FINRA, Royal Gregory Fisher was fined $5,000 and suspended for two months for circumventing his member firm's policies when he acted in fiduciary capacities on behalf of, and accepted being named a beneficiary by, a firm customer to whom he was not related.

A customer granted Fisher power of attorney and named him the first successor trustee of the customer's revocable living trust. The customer also named Fisher as a 10 percent beneficiary of the trust, such that Fisher stood to inherit over $100,000. After the customer's death, Fisher became the primary trustee of the trust and the executor of the customer's estate. Fisher also signed annual compliance questionnaires certifying that he understood the firm's policies and had complied with them.

Firms prohibit registered representatives from acting as fiduciaries for unrelated customers and from being named as beneficiaries because these arrangements create serious conflicts of interest. When a broker stands to inherit from a customer or controls their assets through a power of attorney or trust, it creates incentives to prioritize the broker's interests over the customer's interests. There is also potential for undue influence, where the broker uses their position of trust to obtain financial benefits from the customer.

By accepting these fiduciary appointments and the beneficiary designation while certifying compliance with firm policies that prohibited such arrangements, Fisher violated his firm's rules designed to protect customers from conflicts of interest and potential exploitation.

Investors should be very cautious about naming their financial professional as a fiduciary (power of attorney, trustee, executor) or as a beneficiary unless the person is a family member. These arrangements create conflicts of interest and many firms prohibit them for good reason. Investors should also be aware that registered representatives who accept prohibited fiduciary roles or beneficiary designations may be more interested in their own financial gain than in the customer's best interests.