The Institute for the Fiduciary Standard

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Fiduciary Law

How Has it Evolved Over the Centuries?

Tamar Frankel
Professor of Law
Boston University School of Law

“Fiduciary Duty applies when one person has responsibility for the assets or property of another person. The fiduciary must act in the best interest of the person who has entrusted those assets”– the beneficiary according to fiduciary scholar and law professor Tamar Frankel. During the 2010 Fiduciary Forum in Washington, DC, Prof. Frankel discussed the importance of advice to individual and institutional investors, and why she believes that all who provide that advice should be held to the fiduciary standard. “There is a big difference between the suitability standard and the fiduciary standard. Unfortunately, studies show that investors typically do not make this distinction.”

 

The Origins of Fiduciary Duty and Some Key Differences Between Brokers’ and Fiduciaries’ Duties.

Arthur B. Laby, Professor of Law
Rutgers-Camden School of Law

Professor Laby discusses the origins of fiduciary duty and the sharp differences between brokers and investment advisers duties to their clients. Professor Laby notes that fiduciaries are very different from other types of services providers, because they uniquely have a duty to “adopt the principal’s goals, objectives or ends… and promote those ends.”

The Fiduciary Standard: What is it?

Robert A. Prentice, JD
Chair-Business, Government and Society
McCombs School of Business
University of Texas at Austin

Prof. Robert Prentice said that for even savvy, well-educated investors, the perception is that brokers already do have fiduciary duty to clients. He discussed how the law can help shape the culture of a profession. He highlights the significant difference between the law requiring advisors to do what’s in the best interest of their clients and it not doing so. This requirement changes the behavior of advisors, thus changing the culture of the financial services industry..

*The presentations of professors Frankel, Laby and Prentice are from The Fiduciary Forum 2010, and courtesy of, The Committee for the Fiduciary Standard.

Fiduciary Doings

Tamar Frankel and Phyllis Borzi

 

The Institute organized a meeting to discuss common interests on Reg BI, the states and advocacy on January 16 in Washington. 22 leaders from nine advisor and consumer advocacy organizations attended.

Here, Phyllis Borzi (left) and Tamar Frankel, Institute Board of Advisor members, are seen readying to depart an Institute dinner, the evening before, where they led discussions.

Carolyn McClanahan

 

"With the advent of 401(k)s and the decimation of pension plans to ensure financial security in old age, a fiduciary standard is more important than ever. The public needs to be confidant that advisors helping them plan for their retirement years always and only act in their best interest as a fiduciary. I'm happy to endorse organizations such as the Institute for the Fiduciary Standard that promote protections for those who need to secure their financial future."