Willing Fiduciary

With whom do you work?

Month: July 2016

Fiduciary Oversight

Establishing a Retirement Plan, in itself, is not a fiduciary action but a business decision. However, by implementing a plan one is acting on behalf of the plan and in these actions one may be a fiduciary. For example, hiring a service provider in and of itself is a fiduciary function.

Acting prudently with regards to oversight is a critical responsibility under ERISA but not engrained in the culture of Employer Sponsored Retirement Plans and the Investment/Brokerage business. The culture has been compensation and product spread driven for decades. In fact, it doesn’t seem as if fiduciaries are aware of others who serve as fiduciaries which can leave them vulnerable to participate in another fiduciary’s breach of responsibility.

Oversight can be demonstrated by following and documenting a formal review process visible through technology. This is what the regulatory authorities are asking for.

Fiduciary Virtuosity

Fulfilling a Fiduciary Obligation is not a solitary achievement but one that is habitually executed. It can only be defined as a virtuous act of both trust and accountability made visible when someone has placed their client’s goals before their own. But is it also a virtuous expectation?

Many professions have to be practiced with standards of excellence that originate through evidence based evaluation of judgment. It is reasonable to conclude that a client of someone calling themselves a Financial Advisor would expect that these moral and virtuous standards are executed by putting their interests in the forefront. Who else’s goal is to be actualized?!

Is there really any other way to help people reach their goals and/or another expectation that a client should have?

A Robo-advisor is not a Fiduciary

A robo-advisor cannot put “its client’s interests before their own” because it has no interests.

Goals are determined by a series of questions and responses are driven by algorithms. It is algorithmic suitability.

There is no subject master expertise, insights or wisdom, and there is certainly nothing proactively propulsive with regards to future market activities and/or change preemption.  There is no behavioral coaching.

Trust is a perception based on rational reflections about the future. Can a Robo-advisor have rational reflections about the future or just statistic generalities?

There is nothing wrong with a Robo-advisor.  However, before getting what you pay for you have to know what to pay for.


Fiduciary vs. Proxy vs. Advocate: For whom are they biased?

A proxy is a person authorized to act for another.

An advocate is a person who publicly supports or recommends a particular cause or policy.

Both can create a funding bias by creating a tendency for originating studies and conclusions that support the interests of the study’s financial sponsor. The reciprocity trait in human nature can sometimes fuel this further by compelling a person to return favors.

Aside from a trustee, the only person who maintains an ethical and legal relationship bound by trust who prudently takes care of assets for another person or entity is a fiduciary.

Are your partners proxies for someone other than you?

Are your partners advocates for a firm or industry that compensates them?

Is your partner a legal fiduciary or are they biased toward another’s goals?

Powered by WordPress & Theme by Anders Norén