The Institute for the Fiduciary Standard launched the Campaign for Investors on May 24 with a theme for the new age of fiduciary duties: consumerism. Vanguard founder John C. Bogle1 said it well in his keynote address at the launch at the National Constitution Center. Bogle forecast better and more transparency, disclosure and investor education in “an age of consumerism, the most powerful, single economic force in all of human history.”
Bogle, who just observed his 65th year in the industry, was heralded last week by Wall Street Journal columnist Holman Jenkins as the “Undisputed Champion of the Long Run.” It’s fitting the tribute to Bogle was in the Journal. Bogle points to free-market luminary Adam Smith for “endorsing, not only the power of the consumer, but the principle of fiduciary duty.”
The Institute for the Fiduciary Standard established Fiduciary September in 2012 to highlight the vital role of fiduciary principles in investment and financial advice.
The Institute’s Fiduciary September 2016 carries this age of consumerism theme and focuses on ‘Raising the Standard, Delivering the Promise.’ This is a watershed year. The DOL Fiduciary Rule sets the stage for unparalleled, investor-centric advice.
This means advice for investors must meet higher expectations that are defined by more convenience and choice and better products and services. Competent and ethical advisors are increasingly prominent and accessible. Clearly, the 21st century fiduciary advisor / client-centric paradigm is emerging and market forces are key to this rise.
Yet overshadowing this bright picture is the cloud of investor distrust, which persists eight years after the financial crisis. Seemingly impervious to market rebounds, some research suggests investor distrust is actually worse today than several years ago.
One explanation for this lingering cloud is the seeming lack of industry attention. Other than the CFA Institute and the Institute for the Fiduciary Standard, and a small number of advisory leaders who have spoken out, there seems to be very little public discussion among advisory industry leaders about investor distrust. That is, very little discussion suggesting investor “distrust” is a serious concern that is deserving of advisor attention and cries out for concrete strategies to address it.
Certainly, some brokerage or advisory firm leaders in the post financial crisis years have proactively spoken out. Leaders such as John Thiel, John Taft, Ron Carson, Tom Nally and Mark Tibergien have been heard, but their voices remain the exception to the rule of general industry silence.
Today’s investors’ exude skepticism.
They have lots of questions and demand answers. This requires technology and resources delivered with transparency, clarity and honesty and, importantly, concrete actions. Recall the words of language expert Michael Maslansky who said “Words in the absence of deeds will fail.”
Fiduciary September 2016 seeks to address this picture of persistent investor doubts – in an otherwise upbeat new world of 2016, where emerging market dynamics raise investor expectations and awareness and effectively establish a higher investor standard. For Fiduciary September 2016 program details, see: www.thefiduciaryinstitute.org.
In sum, Fiduciary September 2016 entails:
“What Investors Can Learn From an Advisor’s Form ADV.” Fresh research from the Institute for the Fiduciary Standard highlights significant differences among RIAs and how investors can identify key information in the ADV to better understand these differences.
The Institute will announce its “Best Practices Fiduciary Advisor Affirmation Program,” which is designed to help investors screen and differentiate investment professionals.
A webinar later in September on “Investor Trust and Fees Transparency” will feature researchers and a leading practitioner providing best practices on advisors communicating with clients on fees.
The Frankel Fiduciary Prize Program in Washington will honor Phyllis C. Borzi, with a program which seeks to highlight the historic significance of the DOL Fiduciary Rule.
Fiduciary September 2016 occurs at a transformational time for finance and financial advice. Only time will tell if Adam Smith’s embrace of fiduciary duties is felt by the industry.
1Disclosure: I edited the 2013 book on the legacy of Jack Bogle, The Man in the Arena.