I had the pleasure of visiting the monthly meeting of the FPA of Greater Rochester New York last week. As a past president of its predecessor chapter (at the time, the Upstate New York Chapter, which included not only Greater Western New York—Buffalo and Rochester—but also Syracuse and Binghamton, was among the ten largest chapters in the nation), I try to stay up-to-date on the goings-on of the group.
Of particular interest at this meeting was the speaker, my good friend Don Trone, who offered an intriguing title for his talk: "The Dishonest have Discovered that the Best Camouflage is the Cloak of a Fiduciary Standard."
Don said quite a few interesting things, several of which may find themselves in future FiduciaryNews.com stories, but I wanted to relay one idea he shared that struck me.
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He mentioned that, when he started in the business, fiduciary as a concept represented a ceiling to aspire to. In anticipation of the Department of Labor adopting its proposed fiduciary rule, Don predicted fiduciary will soon become the new floor in the business.
It reminded me of something I wrote in an BenefitsPro article a few weeks ago: "When everybody's a fiduciary… no one is."
Fiduciary as a new floor represents a double-edged sword, as ERISA attorney Stephen Rosenberg of the Wagner Law Group in Boston implied in an interview published this week, (see "Exclusive Interview: ERISA Attorney Stephen Rosenberg Says Litigation's Legacy is Improved Plan Design," FiducairyNews.com, October 19, 2015).
Let me put this another way: Fiduciary will soon become, if it hasn't already, the equivalent of a 4-year college degree.
About a generation or so ago, it became apparent that one needed a 4-year college degree to have the best chance to place yourself on the conveyer-belt of a solid career. As more and more of the high school aged population realized this, the demand of college seats skyrocketed.
As true as possible to economic law, as demand mushroomed, so did the supply of colleges. Either new colleges formed or existing colleges expanded the size of their classes. With more and more students entering college, the overall college student population became less selective. That meant the quality of the end product—college graduates—diminished.
It's gotten to the point that some well-known entrepreneurs are actually encouraging the best and the brightest high school students to not attend college—and they're even paying them to do so!
To be a fiduciary was once an aspirational calling. It was special because only a few people qualified to fill that demanding role.
It was a role not suitable for all, since it embodied a sense that bordered on the philosophical.
True fiduciaries—trust officers—were like tenured professors. They were free of any burden that might compromise their ability to always serve in the best interest of the beneficiary. Their mission lay solely with the beneficiary, not with the corporate imperative of the accounting department.
Others were tasked to ensure the institutions that employed them remained profitable. These fiduciaries focused only on one thing; thus, they were able to dive deeper into the needs of the client than a lesser service provider could ever imagine.
Today we sit on the cusp of a new definition of fiduciary, one far removed from those time of yore when trust was the name of the bricks-and-mortar structure within which fiduciaries performed their duty. Soon, everyone will be expected to act as a "fiduciary" —whatever that may mean.
I'm not too sure that's a good thing.
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Christopher Carosa
Chris Carosa has been writing a weekly article and monthly column for BenefitsPRO online and BenefitsPRO Magazine since 2011 and is a nationally recognized award-winning writer, researcher and speaker. He’s written seven books, including From Cradle to Retire: The Child IRA; Hey! What’s My Number? – How to Increase the Odds You Will Retire in Comfort; A Pizza The Action: Everything I Ever Learned About Business I Learned By Working in a Pizza Stand at the Erie County Fair; and the widely acclaimed 401(k) Fiduciary Solutions. Carosa is also Chief Contributing Editor of the authoritative trade journal FiduciaryNews.com and publisher of the Mendon-Honeoye Falls-Lima Sentinel, a weekly community newspaper he founded in 1989. Currently serving as President of the National Society of Newspaper Columnists and with more than 1,000 articles published in various publications, he appears regularly in the national media. A “parallel” entrepreneur, he actively runs a handful of businesses, including a small boutique investment adviser, providing hands-on experience for his writing. A trained astrophysicist, he also holds an MBA and has been designated a Certified Trust and Financial Advisor. Share your thoughts and story ideas with him through Facebook (https://www.facebook.com/christophercarosa/)and Twitter (https://twitter.com/ChrisCarosa).
