The Society of Fiduciary Advisors

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The Society of Fiduciary Advisors will elevate the role and counsel of the financial advisor by establishing what is required of us as advisors in fulfilling our fiduciary responsibilities. This is important as advisors are required to declare their fiduciary status, yet do not have access to the enabling resources. In order to foster the development of the resources necessary for advisors to declare their fiduciary status, to reduce the labor intensity of fiduciary counsel and to bring clarity to what is required of us, advice must be defined. Given our NASD supporting firms do not acknowledge our fiduciary status and the SEC does not want to define it, an ecumenical group of the industry's leading advisors, technical experts and technologist have formed the Society of Fiduciary Advisors to define fiduciary counsel for each of the sixteen major market segments recognized by the IRS as representing all taxable and tax-exempt entities. This initiative, called the Fiduciary Investment Standards Initiative (FISI), will be accomplished utilizing a collaborative extranet.

The Fiduciary Investment Standards Initiative

The purpose of a collaborative extranet site is to elicit and more readily manage input from our industry’s leading authorities, technical experts, technologists and practitioners on defining professional investment and administrative counsel for each of the 16 major market segments (recognized by the IRS as constituting all taxable and tax-exempt entities), based on fiduciary principles utilizing statute, case law and regulatory opinion letters as our reference point.

There are three levels of granularity we seek to achieve in defining advice.

1. The first level of granularity is to define the breadth of investment and administrative counsel citing statute, case law and regulatory opinion letters. We are using as our base point the Foundation for Fiduciary Studies' authoritative research that establishes a prudent decision-making process for investment fiduciaries comprised of 27 practice standards that cite statute, case law and regulatory opinion letters. The Foundation of Fiduciary Study’s 27 practice standards constitutes the breadth of our counsel as required by law or regulatory mandate.
2. The second level of granularity is to define best practices or the depth of our counsel again referencing case law, statutes and regulatory opinion letters so best practices utilized by advisors in providing investment and administrative counsel can be audited back to an unimpeachable authority. These are the broad principles upon which investment and administrative counsel are based.
3. The third level of granularity is to establish for each best practice the process, procedure, workflow, and task necessary for each best practice to be successfully executed. This level of granularity is, in effect, “generally accepted investment principles” and allows much of the disclosure, reporting and prudent process detail in fiduciary responsibility that can be automated, to be automated, removing a heavy administrative burden from the advisor and/or their supporting firm. This third level of granularity in defining advice is like “generally acceptable accounting principles” in that it will continue to evolve over time in response to inevitable change, innovation and best thinking of the day. This definition of advice will stimulate much needed innovation.

The objective is to foster the development of an investment process consistent with our fiduciary responsibilities which, by virtue of advisors working within the constraint of this process, will ensure the full range of investment and administrative values (and the incredible amount of portfolio detail) required to fulfill our fiduciary responsibilities will be addressed and managed.

In order to democratize access so all advisors can provide fiduciary counsel, reduce the labor intensity of fiduciary counsel and to drive down cost of the enabling resources (process, technology, support infrastructure), it is essential that we define advice - both in terms of best practices and in terms of process, procedure, workflow and task. Though this task is never-ending, we can get 98% there over the next 12 to 24 months for the individual, defined contribution, and foundation and endowment investor market segments, which are the first three of the 16 market segments that FISI will focus upon. Here is how you can help.

We would like you to nominate experts and authorities you use as resources to work with individuals, defined contribution plans, and foundations and endowments, to contribute their expertise and insight in creating what will become “generally acceptable investment practices.” Each of the 16 FISI market segment chairpersons will select the working group for their market segment based on expertise, experience, commitment and the complementary skill set of the collective working group. Invitations will be extended as each FISI working group is formulated.

Your support in democratizing access to the enabling resources necessary to fulfill our fiduciary obligations is greatly appreciated.

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