Fiduciaries

Informed, Prudent & Effective

What is a Fiduciary?

Simply put, a fiduciary is anyone responsible for managing someone else’s money.

Who is a Fiduciary?

According to the fiduciary advocate group, fi360, “It is not uncommon for fiduciaries to be unaware of their status. If a person is a decision maker (or responsible person) for one of the following entities they are probably a fiduciary:

  • Private Family Trust – The trustees are often family members who are managing the finances of an elderly parent or grandparent. The trustee has a fiduciary responsibility not only to the elderly person but also to the eventual heirs.
  • Employee Pension Plans – The employer (and the committee) have a strict duty to manage these plans for the sole benefit of the participants and their beneficiaries.
  • Endowments and Foundations – The directors and officers of charitable organizations are required to act as a prudent investor would, using a portfolio approach in making investments and considering the risk and return objectives of the fund.

It's the Process Stupid!

While it is often poor performance that triggers scrutiny, the standards of modern prudent fiduciary investing do not allow for performance to be used as a criteria in determining if there has been a breach of fiduciary duty. The prudence of a fiduciary’s actions is determined not by a portfolio's results but by the soundness of the decision-making process that led to those results.

Duties

The duties of a prudent process are defined in the Uniform Prudent Investor Act. Below is a list of the important duties:

  • To be loyal and impartial
  • To investigate relevant facts
  • To consider the risk/return tradeoff
  • To consider the time horizon
  • To exercise reasonable care, skill, and caution
  • To evaluate investments in context of the portfolio as a whole
  • To diversify in order to avoid uncompensated risk
  • To consider special circumstances
  • To only incur costs that are reasonable and appropriate
  • To consider tax consequences of actions
  • To monitor progress
  • To delegate when appropriate

Our Services

We help fiduciaries follow a prudent process whether it is in our role as a consultant or as an investment advisor. While each individual situation is unique the broad outline of a prudent process is the same. It requires us:

  • To gather and organize information
  • To create a plan that is documented in an investment policy statement
  • To implement the plan effectively and cost efficiently
  • To monitor the plan and the client’s situation to insure that it is on track and that is adjusted for changing circumstances.

Solutions for Your Circumstances

Prudent Planning in an Uncertain World