Fiduciary Standards, Retirement, and Politics

The definition of “fiduciary standard” I prefer to use goes like this: to conduct oneself legally, ethically, and morally when giving advice and acting on behalf of others. It means I’ll act in someone’s best interest at all times. It implies the duty of good faith and trust at all times when performing duties on behalf of others.

There are statutory rules in place, and case law supports those rules, to assure members of the public that when we seek advice or place trust in others whose skills we need to function, their actions and advice are in our best interest as consumers.

The obvious application of this standard is to Attorneys, Certified Public Accountants, Bank Trust Officers, Physicians, Architects, and certain financial professionals. The latter applied to me specifically when I created my own Registered Investment Advisory firm and became a Investment Advisory Representative. Under state and federal law, I officially became a fiduciary.

Before that happened, however, I had functioned for years as a fiduciary without it being statutorialy defined. The fact that I declared myself a fiduciary, and conformed to a fiduciary standard, that was sufficient for me to be held legally accountable as a fiduciary.

Here in the United States, much of our legal framework hearkens back to English common law. It was what drove the founders of our country when they drafted the Constitution, subsequently ratified it, and from time to time added Amendments. The language used then and the bahaviour now demanded of those in whom we apply faith and trust are centuries old.

The word fiduciary derives from the Roman and civil law recognition of a type of contract called fiducia and/or contractus fiduciae. Wikipedia provides that such a contract involved a sale to a person coupled with an agreement that the purchaser should sell the property back upon the fulfillment of certain conditions. I’ll leave it to you to delve deeper into all that.

At my online school called Successful Retirement Secrets, there is a lesson dealing with how to find someone you can trust if you need help from a financial professional. It hinges on finding someone who, when asked if they are prepared to act in a fiduciary capacity when giving you help, their immediate answer is “Yes”. It binds them legally, ethically, and morally, to act in your best interests.

Apart from this being on my list of pending ideas to write about, there is an evolving conflict in this country between the current holder of the Office of the President, Congress and we the people. The elected parties, both collectively and individually, swore an oath to protect the Constitution, and by extension, to act in our best interests as people of the United States.

For over 240 years, the people of the United States have been governed largely by individuals who, after taking their respective oaths of office, have been held to a fiduciary standard. They have divested themselves of whatever might cause them personal gain such that their actions on our behalf would not be compromised. That isolation has resulted in behavior designed to support what is in the best interest of the citizens of the United States.

These fiduciary standards are not so restrictive as to disallow differences that we today attribute to political pressures. Those are understood to exist and have existed for over the same 240 plus years. And I’m not so naïve to think that some members of all political parties have not pushed the envelope along the way to benefit personally.

My practice as a financial professional is totally insignificant when compared with the significance of the Office of the President of the United States. Yet it is abundantly clear to me that someone in whom we have placed faith and trust to act in our best interest as a fiduciary is failing. It can be argued his behavior is neither legally or ethically wrong. But as a functioning member of society, I find his inability to conform to a fiduciary standard is a real problem.

If I had acted in a similar manner toward my clients, people who put faith and trust in my actions on their behalf, I’d be held accountable. There’s a reason Bernie Madoff will spend the rest of his days in jail.

We can argue and debate why this has happened, and argue and debate the extent we think it matters, but it doesn’t change the facts. I did not vote for the current president. I saw too many examples of his failure to function in the best interest of anyone other than himself. I questioned whether someone who, instead of paying those with whom he had a contract in his business relationships, chose to sue them to avoid paying for their skills. Such a person was not worthy of my trust.

Today I encountered an article written by George T. Conway III. Mr. Conway is an Attorney, whose practice makes him intimately familiar with the concept of fiduciary standards. The title of his article is Unfit for Office and I’m sure you can find it easily with a simple internet search. It’s long, detailed, and leaves little doubt about his analysis of Donald Trump.

He argues persuasively that we, as citizens of these United States, have misplaced our faith and trust in the current President. He also suggests we all have the ability to recognize when something is wrong. We don’t need a medical degree to call for an ambulance if we witness an auto accident and know there are people who need help. He argues persuasively there is something wrong that needs to be addressed.

As humans, we’ve developed people skills since early childhood. As adults, we instinctively react to bullying, to others in distress, to the good fortune of others. We have the capacity to feel empathy for those who’ve lost a loved one, or to feel happiness when good fortune is bestowed on people we know.

Just as I don’t need to have meteorological training to know which way the wind is blowing, I don’t need to have a mental health degree to determine there’s something wrong with the bahaviour of the person in whom we have given our trust and faith to properly lead us as President.

Had I been charged with a failure to perform my fiduciary duties as a financial professional, and was convinced I had not failed, my automatic reaction would be transparency. If there are records to be seen, documents to share, my ability to counter what I believed to be ‘fake news’ would be to offer up everything to prove I’m right. To do otherwise would be to admit my failure.

Instead, this person does everything possible to hide such information, to deny, to lie, to obfuscate. I like to think I have fairly sophisticated people skills. After all, I’ve survived for years as an insurance agent, as a financial planner and investment advisor.

Without such people skills, coupled with a willingness to be a fiduciary, I’d have never lasted 40 plus years in my chosen profession. I believe my success is as much to do with my embrace of fiduciary standards as it was to my education and modest intellect.

As stated in another piece I recently wrote, the good times come to an end and so do the bad. If you agree these are relatively bad times, gather your thoughts, be patient, and make sure you’re registered to vote, and then do so. And don’t forget to encourage others to do the same.

We will survive this, but probably not without a lot more gnashing of teeth.

Tony Kendzior, Gainesville, FL \ 4 OCT 2019