Merely Fiduciar y
... if we define fiduciary as
the alignment of Governance
with Trust, then Stewardship,
Loyalty and Leadership
actually define a higher
professional standard of care. ”
It starts with good Governance; with your ability to
clearly communicate your procedural prudence – the
details of your decision-making process.
Trust is the next step which will likely be out of sequence
for many of you. You might actually have put Trust
at the top of the hierarchy. After all, isn’t our primary
objective to be the trusted plan sponsor? True, but what
you’ll discover is that the remaining terms all build
on Trust. If there is no Trust, there can be no sense of
Stewardship, Loyalty or Leadership. Think of Trust as
the cornerstone – remove the stone and the rest of the
structure will fail.
Stewardship is on the next step. To be a good steward,
you must be trusted. No one is going to believe that you
are passionate about protecting their long-term interests
if they don’t trust you.
Loyalty follows Stewardship – it’s demonstrating that
you are being faithful and steadfast to your stewardship
principles. Again, if people don’t trust you, they will
not be loyal to you.
Finally, at the top, is Leadership. To have a successful
plan, to produce positive retirement outcomes, plan
participants must view you as a leader.
So where does a fiduciary standard fall within this
hierarchy? Fiduciary is the alignment of Governance
with Trust. A fiduciary’s procedural prudence is defined
by Governance, and the principle of the “best interests
of the participant” forms the basis for Trust.
Note that if we define fiduciary as the alignment of
Governance with Trust, then Stewardship, Loyalty and
Leadership actually define a higher professional standard
of care. Remember one of my opening comments: It is
not the function of regulators to define the gold standard;
their function is to define the minimum standard one
has to meet in order to maintain the qualifications of a
retirement plan.
Through the eyes of your participants, you should not
want to be viewed merely as a fiduciary; you should
want to be viewed as a leader. n
Donald B. Trone, GFS® is the President of the Leadership Center for
Investment Stewards and the CEO/Chief Ethos Officer of the 3ethos. Don
was the first Director of the newly established Institute for Leadership at the
U.S. Coast Guard Aca