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The Institute for the Fiduciary Standard

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John Langbein Awarded the Frankel Fiduciary Prize

By Knut Rostad on September 23, 2019

Originally posted on AdvisorPerspectives by Robert Huebscher.

John Langbein accepting the Frankel Prize from Deborah DeMott, a professor of law at Duke University and a member of the selection committee.

John Langbein may not be a familiar name to financial advisors, but he has had a significant and lasting impact on our profession. On September 16, he was awarded the Frankel Fiduciary Prize.

Langbein is an emeritus professor of law at Yale, specializing in trust law. To appreciate the impact of his work, consider that, prior to the 1990s, bank trust portfolios were routinely allocated to what were then considered safe assets – bonds. Langbein, through his scholarship and changes he spearheaded in trust law, transformed this practice to use modern portfolio theory (MPT).

Langbein provided the intellectual foundation for the prudent investor rule to use MPT in fiduciary investments. He introduced this concept in 1992, and by 2006 it was adopted by every state. Data shows that this led to greater allocations to stocks starting in 1992 by banks, based on pension and charitable endowment holdings.

“The asset allocation of trillions of fiduciary assets has been altered in a beneficial way due to the scholarship and legislation led by Langbein,” said Robert H. Sitkoff, a professor of law at Harvard Law School, who also spoke at the presentation.

The Institute for the Fiduciary Standard established the Frankel Fiduciary Prize to honor individuals who advance fiduciary principles. The Frankel Fiduciary Prize is awarded annually to a person who has made significant contributions to the preservation and advancement of fiduciary principles in public life.

The prize is named in honor of Tamar Frankel, a pioneer in fiduciary law scholarship and advocacy for fiduciary principles and a professor emeritus of law at Boston University.

Langbein delivered a talk about the two core principles of trust law, how those principles are routinely compromised and what can be done to prevent abuse.

Read the rest of the article here.

Dan Moisand

 

Dan Moisand is a nationally recognized fiduciary fee-only financial planner, an Institute Real Fiduciary™ Advisor and Chair-elect of the CFP Board.

The Institute has enshrined the ‘Moisand Rule’ on fiduciary practices. It is basic and is more important today than ever: “You have to avoid conflicts. If I avoid a conflict, I don’t worry about it.”

Watch the video of Moisand speaking here.

Bob Veres

 

Bob Veres is a long term observer of financial planning. His Newsletter, “Inside information” Is a staple of leading planners. In the May edition he writes about fiduciary and the Institute.

"But a much bigger point is that the fiduciary standard—as Knut Rostad of the Institute for the Fiduciary Standard has pointed out—has been determined by the Supreme Court (1963 ruling) to be at the very heart of the Investment Advisers Act of 1940. It is the foundation of what it means to be an RIA registered with the SEC instead of a tipster or a tout."

- Bob Veres, Parting Thoughts ... The SEC's Own Compliance Culture

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