Fiduciary Industry Leaders to Create Best Practices Guide

FiduciaryInstituteWebsiteHeaderIn an effort to bridge the gap in the lagging fiduciary duty legislation, the Institute for the Fiduciary Standard, along with the help of industry experts (including the Financial Fiduciaries Team!) has created a proposed list of best practices to “help investors identify true fiduciaries committed to objectivity, transparency, and plain English communications. Crafted to be concrete, verifiable and understandable – Best Practices communicate to investors how true fiduciary advisers and brokers are a breed apart,” according the Institute’s President, Knut A. Rostad.

The guide outlines 11 proposed best practices, which include:

  1. Affirm that the fiduciary standard under the Advisers Act of 1940 governs the professional Relationship at all times.
  2. Provide a “reasonable basis” for advice in the best interest of the client.
  3. Communicate clearly and truthfully, both orally and in writing. Make all disclosures and agreements in writing.
  4. Provide, at least annually, a written statement of total fees and underlying expenses paid by the client. Include an accounting or good faith estimate of any payments to the advisor or the firm or related parties from any third party resulting from the advisor’s recommendations.
  5. Avoid all conflicts and potential conflicts. Disclose all unavoidable potential and actual conflicts. Manage or mitigate material conflicts. Acknowledge that conflicts of interest can corrode objective advice.
  6. Abstain from principal trading unless a client initiates an order to purchase the security on an unsolicited basis.
  7. Avoid significant gifts, third party payments, sales commissions, or compensation in association with client transactions that cannot be directly credited back to the client or managed as a fee offset.
  8. Ensure baseline knowledge, competence, experience and ongoing education appropriate for the engagement.
  9. Institute an investment policy statement (IPS) or an investment policy process (IPP) that is appropriate to the engagement and describes the investment strategy. Consistently follow and document a prudent process of due diligence to research and analyze investment vehicles; on request, document the prudent process applicable to any recommendation
  10. Have access to a broad universe of investment vehicles that provide ample options to meet the desired asset allocation and in consideration of widely accepted criteria.
  11. Consider peer group rankings in ensuring compensation and expenses are reasonable.

Stay tuned for more information on this valuable tool in helping to protect investor’s rights.

About Objectively Speaking

Tom Batterman, founder of Vigil Trust & Financial Advocacy and Financial Fiduciaries, LLC is in the business of representing the best financial interests of his clients. Having provided objective, fee-only financial management services for over two decades, he specializes in managing the investment and related financial affairs of individuals and mutual insurance companies who do not have the time, interest or expertise to manage such matters on their own. As an objective, unbiased professional who takes on a fiduciary responsibility to his clients, he guides clients to the financial decisions they would make themselves if they had years of training and experience and the time and expertise to fully research and understand all of their options. Founded in 2010 as an outgrowth of Vigil Trust & Financial Advocacy, Financial Fiduciaries, LLC is a financial management solution for individuals and mutual insurance companies who recognize they do not have the time, interest or expertise to properly attend to their financial matters on their own. While there are many financial “advisors”, most of them have investment products to sell and the “advice” they provide is geared toward getting their clients to engage in a purchase. As one of the rare subset of advisors known as “fiduciary advisors”, Financial Fiduciaries does not sell any investment product so its guidance is not compromised by conflicts of interest which plague ordinary advisors. Prior to his employment in the financial industry in financial advocacy and trust positions, he worked at a private law practice in the Wausau area in the areas of estate planning, tax, retirement planning, corporate organizations and real estate. He is a graduate of the University of Wisconsin-Madison and the UW-Madison Law School and has during his career held Series 7, 24 and 65 securities licenses. A longtime resident of the Wausau, Wisconsin Area, Tom is active in the community. He enjoys golf, curling, skiing, fishing, traveling and spending time with his family.
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