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May 28, 2015 at 09:00 PM
Don Trone’s transition from Coast Guard helicopter pilot to a fiduciary leader was a personal one: “A mortgage broker took advantage of me and I hated the feeling. I reported the incident to the regulators and they did nothing.”
After leaving active duty in 1987, Trone began working on his master’s thesis titled, “Integrating a Fiduciary Standard of Care Into an Investment Advisory Practice.” While compiling the thesis’ bibliography, “I could only find three books on the subject of fiduciary responsibility,” Trone recalled. “What struck me is how could you have a topic that impacts so many people have so little academic rigor? That’s when I made the decision to pursue what we now call the fiduciary movement.”
He’s been in the driver’s seat of the fiduciary movement ever since—first launching the Foundation for Fiduciary Studies, becoming principal founder of fi360, to now heading 3ethos. “I’ve always been focused on advancing a professional standard of care for advisors,” Trone said.
The start of the fiduciary movement began in 1985, Trone said, when Charles Ellis released his book, “Investment Policy: Winning the Losers Game.” In 1987, Trone published his master’s thesis, which was later published in 1989 as the book “Procedural Prudence.”
“For the first 20 years, we defined the standard in terms of fiduciary responsibility. For the past eight years, we have shifted the focus of our research and training to define a professional standard in terms of leadership and stewardship,” Trone said.
The DOL’s attempt to redefine the term fiduciary under the Employee Retirement Income Security Act “proves the point that we’ve made for several years: that the regulators will likely go the route of defining a de minimis fiduciary standard—bronze instead of gold,” Trone continued. “An elite advisor who wants to be viewed as a professional will no longer feel comfortable distinguishing themselves as a ‘fiduciary,’” but as leaders.
Any fiduciary rule issued by the Securities and Exchange Commission, Trone said, will be a “compromise so it will be the minimum standard,” with “another 25 or so questions [being added to] the Series 7.”
As for the DOL’s reproposed fiduciary definition, Trone told the department in a May 26 comment letter that its plan “will not help American retirement savers.” Rather, “it will only add more paperwork and complexity.”
