Fiduciary Bytes

Fiduciary Bytes
Issue 2; Nov. 17, 2021
Being Unique in a Plan Vanilla World, Part 2

Welcome back to Fiduciary Bytes. In the first issue I started a discussion about strategic planning and the idea of an investment advisory firm competing in the market place by being unique. I hope you found time to use the link in the last issue to watch the Strategy presentation by Harvard Professor Michael Porter because I think a lot of fiduciaries could benefit from his approach.

The “Fiduciary Standard” has gotten a fair amount of attention recently. The SEC has changed the “Suitability Rule” to require Stock Brokers to follow a “Best Interest Rule” and the CFP Board has beefed up their CFP Standards of Conduct to require a fiduciary standard. However, I suggest that most people, including investment fiduciaries, would have a tough time stating exactly what the fiduciary standard requires other than “acting in the client’s best interest.”

Operating in the “client’s best Interest” covers more than what may be the obvious things and includes such things as the standards used to select other service providers like custodians, disaster recovery plans, cyber security and the protection of client data. In other words, it includes just about everything an advisor does in running the business.

I also suggest that the Fiduciary Standard is very important to clients and prospects, even if they can’t fully explain it. Every wealth management client naturally expects their professional advisors, such as Doctors, Lawyers, Accountants and others to act in their best interest and would be shocked if they didn’t. Retirement plan fiduciaries are required by ERISA to act as fiduciaries to the plan participants and industry surveys show that potential fiduciary liability is at or near the top of the concerns of retirement plan sponsors.

Are you beginning to get the picture? Could an advisory firm that so completely embraced the fiduciary standard that it became part of the firm’s DNA, informed everything the firm does and became part of the firm’s branding, distinguish it from the competition? Would such a firm be attractive to clients and prospects?

Obviously, such a firm would be attractive. The questions that remain are how does a firm get to this point? How does a firm organize all its activities around the fiduciary standard? Finally, how does a firm document it and communicate it to clients and prospects?

The answer to all these questions is a Centre for Fiduciary Excellence (CEFEX), a division of Fi360 Broadridge, Fiduciary Assessment and Certification. Fi360 has published the handbook Prudent Practices for Investment Advisors which identifies and explains 21 prudent practices that advisors should be following. The Assessment compares an advisor’s current practices against these 21 practices using a total of 84 different criteria. The Assessment essentially constitutes a strategic plan to align the firms practices with these practices.

Upon passing the Assessment, the firm is awarded the CEFEX Fiduciary Certification and is permitted to use the CEFEX seal in its marketing efforts. Certification is also accompanied with documentation that can be used in marketing such as a Firm Certification Report and a letter from well-known ERISA attorney Fred Reish stating that CEFEX Certified firms meet or exceed ERISA fiduciary requirements.

Here’s some homework for you. To get an idea if you are ready for an Assessment here’s a link to a shortened version of the Self-Assessment of Fiduciary Excellence. Taking this simple yes or no test will give you an indication of your Fiduciary Excellence.

If you score well, congratulations. You should continue with the complete Assessment so you get full public credit for your accomplishment and have access to the CEFEX marketing documentation.

If you don’t score as well, let’s talk about ways you can meet the CEFEX criteria.

Contact me at or call me at 330 571-4109 for more information about how your firm can be unique in a plain vanilla world.

Thoughts for the month:

“If everyone else seems to be doing it one way, there might be more opportunity the other way.”
Andrew Schevermann,
Co-founder of Arch Systems, Inc

“We are what we repeatably do. Excellence then, is not an act, but a habit.”

“The thing that keeps a business ahead of the competition is excellence in execution.”
Tom Peters

“Practice the philosophy of continuous improvement. Get a little better every single day.”
Author unknown