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Leadership is Exhilarating; Fiduciary is Exhausting

How does that title grab you? Did it catch your attention? Make you smile? Think about all the plan sponsor meetings you’ve conducted where you have tried to teach trustees the multi-dimensions of a fiduciary standard of care. Didn’t get you anywhere, did it?

In 2007, after spending 20 years trying to teach advisors and trustees what it means to be a fiduciary, I began to look for a better approach. No matter how much I tried to make the training experience a positive one, the outcome was always the same: I scared the living daylights out of folks. Rather than feeling good about the work they were doing to help plan participants, they walked away feeling alarmed and concerned.

However, what I did notice is that the people who wanted to become better fiduciaries also seemed to possess certain leadership characteristics. It was this observation that sent me on the quest to see if there was a link between being a great fiduciary and being a great leader.

The title of this column is a true statement – we now know that there are physiological reasons why leadership is exhilarating and fiduciary is exhausting:

• When you are serving in a leadership role, when you are a point of positive inspiration, when you are bonding and building trust with someone – the chemical oxytocin is released.
• In contrast, when we are talking about fiduciary responsibility, which is a form of negative motivation – do it or you have liability, responsibility, or risk – the chemical cortisol is released. Cortisol is an inhibitor to the creation of oxytocin.

If you’re scaring the living daylights out of your clients by telling them about the personal liability they face as trustees, there is no way your clients are going to feel like bonding with you. Making your clients fearful of their role is the worst possible approach you can take if your objective is to get them to trust you. Instead, learn how to become a more effective leader and steward.

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