If you want to know about the fiduciary standard, Knut Rostad’s your guy. Off the top of his head he’ll rattle off details on the Advisers Act, on past SEC rulings, on the history of fiduciary, on the dynamics within the Committee for the Fiduciary Standard or the Institute for the Fiduciary Standard, both of which he founded. He’ll give you informed insight into what the prospects are inside the Beltway for new fiduciary rules from the Department of Labor or the SEC.
So how did this mild-mannered (okay, maybe not so mild-mannered; this guy is passionate!) compliance officer for Rembert Pendleton Jackson, an RIA firm in northern Virginia, forge into the vanguard of advocating for the fiduciary standard?
He gives the credit to Don Rembert, principal of Rembert Pendleton Jackson, who “30 years ago gave up all his licenses and went with the SEC” because he believed “fiduciary was the only way to go.” It’s vintage Knut (he’s now achieved that rarefied status in the advisory world of being identified by only his first name, as is the case with “Deena” and “Harold”) to give credit to someone else while he toils industriously, if not quite in obscurity, as a fiduciary advocate with a sharp focus not only on what should be done, but what realistically can be achieved, especially in Washington.
While Rostad founded the Committee for the Fiduciary Standard five years ago at an fi360 conference, its roots can be traced back to 2005 and the National Council of Financial Fiduciaries, whose founding members included Harold Evensky, with Rostad as executive director. “The most memorable” accomplishment of the NCFF, recalls Rostad, was a public service announcement that the group put out that sought to educate clients of “advisors” that “your butcher is not your nutritionist” (a notion that Elliot Weissbluth of HighTower Advisors ran with in a 2012 animated video).
The committee “exclusively existed to promote the authentic fiduciary standard,” and with a high-powered membership that included noted advisor industry leaders like Evensky, Sheryl Garrett, Ron Roge and Deena Katz (and former IA and Wealth Manager editor Kate McBride). The positive response in Washington was almost immediate, Rostad recalled. “It was mid-July 2009, I was on vacation in Vermont, and got a call from Elisse Walter [then an SEC commissioner] to talk to her about the authentic fiduciary standard. That was the beginning.”
Then, Rostad said, “over the next two years the committee was extremely active visiting with the SEC staff, with Chair Schapiro” and other commissioners to talk about “the authentic fiduciary standard.” To the committee, “it became apparent early on that the fiduciary standard as we understood it was a materially different variety than the standard being expressed by SIFMA or FSI.” By October of that year, “SIFMA explicitly said their standard was the strongest in the land. They were contesting that this little upstart group was asserting that SIFMA’s standard was not authentic. They mentioned us by name, so we were being taken seriously.”