The vast majority of our nation’s liquid investable wealth is in the hands of lay-fiduciaries—the 8 million men and women who are responsible for managing the assets of pension plans, foundations, endowments, and personal trusts.
For decades, we’ve attempted to educate lay-fiduciaries on complex legal and regulatory constructs, and on the arcane language associated with portfolio management.
Most of these attempts have failed for the simple reason that “fiduciary” is too abstract to be mastered by part-time decision-makers.
Instead, we should focus our training of the 8 million on the seven behaviors of exemplary lay-fiduciaries. Common characteristics of the best mean that they:
Have the capacity to inspire and engage others
Great lay-fiduciaries demonstrate the ability to enact a fair, just, and transparent process to resolve moral and ethical conflicts. They’re able to craft visions and strategies that gain commitment and alignment. And, they can adapt their behavior to enact more appropriate responses to ill-defined, changing, and evolving situations.
Have the ability to build, maintain, and repair trust.
‘Trust’ is THE prerequisite to effective decision-making. The exemplary lay-fiduciary is able to demonstrate a balanced continuum between their compassion, character, and competence.
Have a sincere commitment to collaborate
Great lay-fiduciaries don’t try to go it alone – they know they have to capture the efforts, focus, and attention of service providers and other key decision-makers.
Are passionate and disciplined about protecting the long-term interests of others
Exemplary lay-fiduciaries have a sense of purpose and live their core values. They promote a culture that emphasizes leadership and stewardship.
Look for ways to increase their understanding of their own strengths and shortfalls
Great lay-fiduciaries are committed to self-improvement and life-long learning.
Demonstrate the ability to manage a prudent decision-making process
The best have the patience to evaluate events calmly in the context of long-term trends, and know-how to distinguish and prioritize important tasks from less important activities.
Are resilient
During the crises of 2020, resilience has become the single most important factor that differentiates the exemplary lay-fiduciary from others. The best are comfortable dealing with uncertainty, have learned not to become incapacitated by fear, and see failure as a learning opportunity.
On the other hand, the rest seek ways to mitigate uncertainty by solely relying on written policies and procedures, suppressing feelings and feedback, and avoiding activities that carry risk and the potential of failure.
An exemplary lay-fiduciary recognizes that they cannot be an expert in all aspects of fiduciary responsibility. When they lack the time, inclination, and knowledge they prudently outsource to experts.
The best acknowledge that their role is to provide essential leadership and stewardship, without which the other fiduciary components cannot be defined, implemented, or evaluated.
Don Trone is regarded as the ‘Father of Fiduciary’. He is the CEO and co-founder of 3ethos and the CEO and one of the co-founders of the Center for Board Certified Fiduciaries which is affiliated with the Wake Forest University School of Professional Studies. CBCF is the only organization offering graduate-level training in the leadership and stewardship roles of fiduciaries.
