When Your Representatives Hold the Purse Strings: Should Government Officials Be Fiduciaries?

What Exactly Is a Fiduciary?

A fiduciary is someone who manages money or assets on behalf of someone else and is legally required to put that other person’s interests above their own. It’s one of the highest standards of care recognized in law.

Think of it this way: If your teenage son asks you to hold his birthday money while he goes on a roller coaster, you’re not supposed to spend it on a beer. That’s the basic idea, just with much higher stakes and legal consequences.

Real fiduciaries — investment advisors, trustees, executors of estates, and corporate board members — face serious penalties if they breach this duty. They can be sued, lose their licenses, face criminal charges, and be forced to pay back any profits they made from self-dealing.

The core obligations are straightforward:

Duty of loyalty: Put the beneficiary’s interests first, always
Duty of care: Make informed, prudent decisions
Duty of disclosure: Be transparent about conflicts of interest
Duty of prudence: Manage assets responsibly, not recklessly

Break these rules, and you’ll likely end up in court. Just ask the Enron executives who breached their fiduciary duties to shareholders.

The Government Accountability Gap

Now let’s talk about government officials. They collect taxes from citizens — money that isn’t voluntary, by the way — and then decide how to spend it. We’re talking about roughly $6.5 trillion at the federal level alone.

Here’s the awkward question: Are elected officials and government bureaucrats held to the same standard as the guy managing your 401(k)?

The short answer is no. Not really. Not even close.

Government officials swear oaths to uphold the Constitution and serve the public interest. But these are vague, aspirational promises enforced primarily through elections and, in extreme cases, impeachment. There’s no legal framework treating them as fiduciaries of public funds the way a pension fund manager is a fiduciary of retirement savings.

Why this matters: When a private financial advisor steers your money toward investments that benefit them personally, they go to prison. When a government official directs contracts to campaign donors, steers spending to their district, or makes decisions based on future lobbying opportunities, we might grumble about it, but rarely does anyone face serious consequences.

What Would Fiduciary Government Look Like?

Imagine if we actually treated government officials as fiduciaries of taxpayer money. What would change?

Personal liability: Officials who waste public funds or engage in self-dealing could be personally sued by taxpayers, just as shareholders can sue corporate directors. No more golden parachutes after mismanaging billions.

Transparency requirements: Every conflict of interest would have to be disclosed publicly before any vote or decision. Family financial interests, stock holdings, future employment prospects — all laid bare.

Duty of care: Officials would be legally required to make informed decisions. Voting on a $2 trillion spending bill you haven’t read? That’s a breach of fiduciary duty. Claiming ignorance wouldn’t be a defense.

Prudent use of resources: Spending decisions would have to meet a “prudent person” standard. Would a reasonable person managing their own money make this choice? If not, it’s potentially actionable.

Burden of proof: Officials would have to prove their decisions were in the public’s best interest, not that the public has to prove corruption occurred.

The standard wouldn’t be perfection — even fiduciaries make mistakes. But it would mean government officials could be held accountable when they prioritize personal gain, political expediency, or special interests over taxpayers.

The Practical Obstacles

Of course, applying fiduciary standards to government isn’t simple. Public policy involves competing interests and values in ways that managing a retirement account doesn’t. What’s “in the public interest” is often legitimately debatable.

Should we fund defense or education? Infrastructure or debt reduction? These are political choices, not just financial ones.

There’s also the question of who exactly the “beneficiary” is. In traditional fiduciary relationships, it’s clear: the client, the shareholder, the trust beneficiary. In government, officials theoretically represent all citizens, but people have wildly different priorities and needs.

And let’s be honest: Getting politicians to agree to hold themselves legally accountable as fiduciaries might be harder than getting a fox to volunteer for henhouse security duty.

But Maybe We Should Try Anyway

The current system relies heavily on the honor system. We hope elected officials will do the right thing. We trust that career bureaucrats will be good stewards. We assume that elections and media scrutiny will catch the worst abuses.

How’s that working out?

We’ve seen bridges collapse while infrastructure funds get diverted. We’ve watched emergency stockpiles sit empty during crises. We’ve seen public pension funds mismanaged into insolvency. We’ve witnessed spending bills that no one read become law.

The financial sector learned its lesson after enough scandals: Impose fiduciary duties or watch trust evaporate entirely. Maybe it’s time government learned the same lesson.

When someone manages your money, we insist they put your interests first and face consequences if they don’t. When someone manages everyone’s money, shouldn’t the standard be even higher?

Your investment advisor can’t shrug and say “well, the voters will decide if I keep my job in four years” when they lose your retirement savings. Why should your representative get away with that excuse when they lose billions of your tax dollars?

Just something to think about next time you hear about another “government efficiency initiative” or “accountability reform” that somehow never includes actual accountability.