Does “fiduciary” still send tingles down your back, or has the love gone out of the relationship?
For more than 26 years I have been teaching retirement advisors that all things warm and wonderful can be linked back to a fiduciary standard. I no longer believe that; I think we may be at the start of what I’ll call the “Post-Fiduciary Movement.”
For about a year now we have been hearing from advisors that they are suffering from fiduciary fatigue, and their plan sponsor clients are suffering from regulatory weariness. As a result, we have removed the fiduciary content from our training programs, and we are focusing on leadership and stewardship instead.
There are two other factors which support the proclamation that we’re at the start of the Post-Fiduciary Movement:
1. The apparent inability of the SEC and DOL to promulgate additional fiduciary standards, or to even maintain the principles-based standards we have today; and
2. The number of elite retirement advisors who recognize that in order to produce “great” participant outcomes we must do more than be compliant with fiduciary requirements.
“Fiduciary” has lost its mojo. In the past, we have used the term to define higher professional standards. In the future, it is very likely that “fiduciary” will only define a de minimis standard, as in:
Are you a fiduciary?
Yep.
Check.
Something more is needed, and that something is a “stewardship standard.” I know that I will need to substantiate this suggestion, which I will do in future columns. For now, let me leave you with two good reasons why a stewardship standard makes more sense:
1. Advisors can opt in regardless of their current registered status. Any retirement advisor can decide to be more fully engaged with their key clients by taking on a greater leadership and stewardship role. It’s no longer, “I have to” — it’s now, “I want to.” Higher, voluntary standards always will produce more favorable outcomes than mandatory rules and regulations.
2. A corollary to the first point, a stewardship standard does not carry the same legal and regulatory implications as fiduciary. “Fiduciary” continues to be the most toxic and polarizing word in the financial services industry. Stewardship, however, has the potential to be the bridge between the broker and advisor communities.
I am not suggesting that we set aside all that we have learned in the past. To the contrary, stewardship can only evolve from an understanding of the rules and regulations associated with a suitability standard and the principles associated with a fiduciary standard.
Don Trone, GFS, is the President of the Leadership Center for Investment Stewards, and the CEO/Chief Ethos Officer of 3ethos. He is the former Director of the Institute for Leadership at the U.S. Coast Guard Academy, founder and former President of the Foundation for Fiduciary Studies, and principal founder and former CEO of fi360.
