Lynn Hopewell wrote simply but effectively, and many of his words are as powerful today as they were when first written. Following is an excerpt from a 1994 white paper supplied through the courtesy of his old firm: The Monitor Group in McLean, Virginia
Common Mistakes of Fiduciaries
Responsible for Investments
By Lynn Hopewell
For fiduciaries, good intentions do not count. In the management of their assets fiduciaries must actually carry out specific steps which are deemed “prudent.”
An important distinction should be understood by every fiduciary. Fiduciaries are not held accountable for poor investment performance per se. If the stock market goes down, and an investment fund experiences losses, that does not necessarily mean that fiduciaries have been imprudent. However, if it is found that investments in the stock market were concentrated in only three stocks that were personal favorites of the fiduciary, then that’s another story. What fiduciaries are responsible for is behaving responsibly and with expertise. . . .
Since it is procedure and not results for which fiduciaries are responsible, it is vital that the implementation of prudent procedures be documented. Fiduciaries must be able to prove that they followed prudent procedures. After the fact, verbal reconstructions are of little defensive use.