More On Legal & Compliancefrom The Advisor's Professional Library
- The Few and the Proud: Chief Compliance Officers CCOs make significant contributions to success of an RIA, designing and implementing compliance programs that prevent, detect and correct securities law violations. When major compliance problems occur at firms, CCOs will likely receive regulatory consequences.
- Client Communication and Miscommunication RIA policies and procedures must specify what type of communications should be retained. The safest course of action is for RIAs to retain all communicationsto clients, from clients, and about client accounts. To comply with fiduciary obligations, communications must be thorough and not mislead.
We knew Harold Evensky has been a proponent of the fiduciary standard for advice givers for some time and that he was a leading light of the Institute for the Fiduciary Standard. So we asked the Institute’s co-founder, Knut Rostad, to comment on Evensky’s contributions.—Ed.
We first collaborated to advocate for fiduciary advice some 10 years ago through a predecessor initiative (to the Committee for the Fiduciary Standard and the Institute for the Fiduciary Standard). Among our activities, we created an ad to explain the differences between advisors and brokers. Its headline was, “Would you expect your butcher to recommend a veggie plate?” Harold’s counsel was on point, and the ad hit the mark and got attention. (In fact, the “Butcher versus Nutritionist” messaging was recently brought back in updated form by HighTower’s Elliot Weissbluth in person and in a YouTube video). At the time I thought that for a guy trained as an engineer, Harold was OK.
Fast forward to 2009. The country was reeling from the financial crisis and financial reform was in the offing. In June, the Obama administration called for such reform that included requiring that brokers rendering investment advice do so as fiduciaries. Several well-respected practitioners and fiduciary experts—including Harold—came together to form The Committee for the Fiduciary Standard. Within a month, the Committee was invited to meet with SEC Commissioner Elisse Walter. We met with then-Chairman Schapiro in September; meetings with Commissioners Paredes, Aguilar and Casey, and SIFMA and FINRA, followed.
Harold’s “leading from behind” style was immediately felt at the Committee, a diverse group of accomplished industry professionals. His vision was clear and concise. Humanize fiduciary. Speak in few words and in plain English (the five fiduciary principles comprise 52 words). Speak about the fiduciary standard in terms of grandmother and apple pie, then repeat as needed. Speak from experience about how brokers can and many already do meet the higher fiduciary standard (Harold used to be a broker).
Harold’s plain-spoken advocacy befits his fiduciary persona and has undoubtedly persuaded thousands of practitioners, reporters and clients over many years. For that we can all be grateful. The next Evensky objective: to get tens of thousands or more investors to ask their broker to sign the Evensky Fiduciary Oath.