What is the Fiduciary Duty of a Board of Directors?

480px-Question-markAs a fee-only financial planner, it is widely understood that we have a fiduciary duty to our clients. But did you know that this duty extends far beyond the client relationship into other areas of our professional lives? Take for instance your role if you are a member of a Board of Directors. Did you ever consider that this role includes a fiduciary duty that encompasses all aspects of the company’s operation, including but not limited to investments?

Even if a company has hired a fiduciary on a subcontracted basis to assist in the administration of their fiduciary duty with respect to investments, the subcontractor is not alleviated of fiduciary obligation for the investments. If an organization chooses NOT use a fiduciary and instead goes for a standard “buyer beware” brokerage arrangement or the “it may not be the best we can do, but it is the most convenient for us” approach to selecting proper investments for the company, the Board is clearly exposed to liability for doing or not doing some things they should have done.

This is all the more reason to ensure that there are members on staff to properly discharge fiduciary duty for investments or that an organization subcontracts with a REAL fiduciary to handle the day-to-day aspects of discharging these important responsibilities.

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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