The New Fiduciary Standard

The New Fiduciary Standard establishes for the industry a credible investment-decision process that will meet the growing expectations of investors and regulators for integrity, transparency, and disclosure of fees and conflicts that affect their returns.

A fiduciary is a person or firm entrusted with the assets of another person or firm. This term encompasses a wide range of professions with varying standards on how a fiduciary must act in order to comply with the law. The legal and financial consequences of failing to meet fiduciary requirements are dire. In today's climate, with the SEC, NYSE, NASD, state regulators, and attorneys-general piling on sanctions, indictments and fines, there is a need for professionals to know what they are supposed to do, what they are supposed to tell their clients, and how they are supposed to document it all.

The New Fiduciary Standard delivers a compact, clear, practical explanation to advisers of twenty-seven fiduciary practices put forth by the Foundation for Fiduciary Studies, a leading industry voice. The practices are divided into a five-step investment process designed to reduce liability.

Foreword by Don Trone, a highly respected name in the financial advisory world and president of the Foundation.

PART ONE: MODERN PORTFOLIO THEORY

Chapter One: Early Years

Chapter Two: Practical Applications

PART TWO: THE FIVE STEPS AND TWENTY-SEVEN PRACTICES

STEP ONE

Analyze Current Position: Practices 1.1–1.6

STEP TWO

Diversify—Allocate Portfolio: Practices 2.1–2.5

STEP THREE

Formalize Investment Policy: Practices 3.1–3.7

STEP FOUR

Implement Policy: Practices 4.1–4.4

STEP FIVE

Monitor and Supervise: Practices 5.1–5.5

APPENDIX I: Sample Investment Policy Statements

APPENDIX II: Subsequent Performance of Mutual Funds: Past Winners’ Uncertain Future