One-Man Think Tank: Being a fiduciary is suddenly in style, even as lawmakers dance around the issue
The conference committee puts off action for another day, but Ron Rhoades points out that the private sector is finding its own solutions
Elizabeth’s note: The conference committee that is hammering out the final version of financial services reform put off a final compromise on the fiduciary standard again yesterday. The likeliest outcome now is that the Senate version of language on the fiduciary standard, calling simply for a study on the issue, will prevail. Congress, which has been heavily lobbied by passionate advocates for the fiduciary standard, and equally passionate and better-funded advocates for protecting the current suitability standard for insurance agents and brokers, seems unable to make the call. In the meantime, customers and breakaway brokers are voting with their feet. One sign of that is the growth in the number and power of organizations espousing the fiduciary standard. Ron Rhoades sums up their growth in this wrap-up of the fiduciary powers in the advisory world.
Fi360 continues expansion as fiduciary movement explodes
Fi360’s recent national conference, held at a resort near Orlando, attracted over 450 participants. As one of the only national organizations focused exclusively on serving the needs of investment fiduciaries, fi360 (www.fi360.com) provides education in the fiduciary standard of conduct, whether arising from ERISA, the Advisors Act, or other sources. In addition to training for its AIF® (Accredited Investment Fiduciaries) and AIFA® (Accredited Investment Fiduciary Analyst) designees, fi360 has expanded to meet the demand for training from qualified retirement plan sponsors, investment stewards, trustees, and investment committees.
For RIAs, the fi360 Toolkits provide a means of supporting of prudent investment process. In a recent interview, Blaine F. Aiken, AIFA, CFA, CFP®, fi360’s CEO, explained: “Fi360’s Toolkits provide a highly visual, easy-to-understand means of managing investment decisions in adherence to a prudent investment process. As advisors use the Toolkits to prepare investment policy statements, conduct asset allocation studies, select investments and produce monitoring reports, they create records of both the decisions undertaken and the basis for those investment recommendations.”
Fi360 Toolkit subscribers and AIF® designees receive ongoing support in adherence to fiduciary practices through fi360’s blog, its National Conference, accessibility to Fi360’s 20+ staff members, and ongoing relationships developed with other designees. Aiken explained that “Fi360 is designed to be a good complement to the CFP®, CFA, CIMA and other designations and programs. We supplement these programs by offering special expertise in fiduciary issues.”
Fi360’s advocacy in D.C. continues, aided by the arrival a year ago of Kristina Fausti, fi360’s director of legal and regulatory affairs. Fi360 recently announced an article competition on the subject of fiduciary responsibility, with a $1,000 award for the top article.
Aiken noted that the future for fi360 is bright, stating: “There is an increasing awareness in the larger financial services firms that a substantial portion of their representatives require education and training in the fiduciary standards of conduct and the means by which to adhere to fiduciary obligations. Most of the growth of fi360 has been the result of the efforts of our dedicated designees, as they speak with their colleagues and tout the benefits of fi360. We continue to expand our team, and our educational offerings, as demand for education on fiduciary best practices explodes.”
NAPFA grows, despite the odds
For over 25 years, the National Association of Personal Financial Advisors (NAPFA) (www.napfa.org) has been the home for fee-only financial planners who adhere to NAPFA’s strict fiduciary oath. Its membership in increased even through the recession, and now stands at more than 1,400 advisors, according to its web site.
NAPFA’s industry-leading Basic Training Program provides essential practice management education for new planners, as well as registered representatives transitioning to the RIA business model. Under the leadership of Chancelor Bob Maloney and six deans, NAPFA University picks up where training for the CFP® certification ends, offering a broad base of intermediate and advanced financial planning courses. All of these programs, as well as additional presentations from keynote speakers, are offered through the four to five conferences NAPFA conducts throughout the country each year.
NAPFA members also benefit from extensive press coverage of the fiduciary movement. NAPFA actively provides the media with access to its members, who in turn are frequently quoted in the consumer press. In addition, NAPFA’s “Find An Advisor” consumer search function results in tens of thousands of referrals to its financial advisors.
As NAPFA’s incoming Chair, Susan John, told me at NAPFA’s May 2019 National Conference: “The strict fiduciary oath each member must undertake to her or his clients, and NAPFA’s high educational and experience requirements, limit NAPFA’s potential membership base to a small fraction of the financial advisor community. We like it that way. Indeed, NAPFA’s continued membership growth during the past difficult economic period, at a time when many other organizations lost members, is a testament to NAPFA’s bright future.”
As consumers increasingly look for financial advisors who wear the fiduciary hat at all times, the National Association of Personal Financial Advisors offers a compelling value proposition for fee-only Certified Financial Advisors.
The Committee for the Fiduciary Standard – short existence, big impact.
Just over a year old, The Committee for the Fiduciary Standard (www.thefiduciarystandard.org) has already achieved a long list of accomplishments in advancing the fiduciary standard in the halls of Congress and with various government agencies. The Committee’s singular purpose has been to “ensure that any regulatory changes meet the requirements of the authentic fiduciary standard, and cover all professionals who provide investment or financial advice, or who hold themselves out as providing investment or financial advice.”
At its page on LinkedIn, the Committee counts 787 members. Recent activities include a March 2010 statement advocating the fiduciary standard of conduct, signed by leading members from the academic and investment communities, as well as by leaders of several of the largest family offices and family office associations. Over the past year, the Committee undertook a survey (with SEI Advisor Network) of consumers, and provided extensive educational materials on the fiduciary standard of conduct to SEC Commissioners and staff, members of Congress and their staffs, and the U.S. Department of Labor.
Despite the all-volunteer nature of the Committee for the Fiduciary Standard and its nearly non-existent budget, the impact of the Committee’s advocacy will likely continue to be strong over the next few years. The Committee’s continued engagement of academics and industry thought leaders, and the Committee’s continued membership growth, provide it with the means to provide education and insight to policy makers across the government spectrum.
National Association of Personal Finance Advisors
Top Executive: Geof Brown, CAE