Lately there has been a lot of discussion about financial services re-regulation and the fiduciary standard for all who provide advice to individual investors. The House of Representatives passed a Bill, and the Senate released a Discussion Draft of their own Bill, detailing financial services reform legislation. The Senate and House proposals both require fiduciary duty for persons who provide advice to retail investors. This editor is a member of The Committee for the Fiduciary Standard.
The founder of the Foundation for Fiduciary Studies, and Fiduciary360, Don Trone, has founded a new firm, Strategic Ethos, based in Mystic, Connecticut, which helps organizations define what he calls "a standard of excellence that is based on leadership behaviors, core values, and a defined decision-making process." Fiduciary duty, required of investment advisors under the Investment Advisers Act of 1940, is principles based, as opposed to rules based. A "defined decision-making process" is required to document fiduciary activities and decision making, and Strategic Ethos and Fiduciary360 can help firms and advisors define that process.
The leadership behaviors that Trone speaks of take center stage as the backbone of a fiduciary process for 401(k) and plan sponsors and retirement advisors. With independent fiduciary Matthew Hutcheson, Trone has written the book "401(k) Ethos," to help guide retirement advisors and corporate 401(k) fiduciaries. He talked with Wealth Manager about Strategic Ethos and the book on February 8th. Hear the Podcast of that interview.
In addition to providing a framework that can help advisors manage their fiduciary duty to clients, Trone emphasizes that the Strategic Ethos fiduciary leadership behaviors have a much broader purpose. Leadership behaviors tend to carry over to other corporate activities, he explains. Trone points out that companies that manage their pension plans well also tend to be well managed in other ways. Take a look, he advises, at the companies that BrightScope rated as the best run plans in the U.S. in, "Who Sponsors the Top 401(k) Plans?"
