There are 17.5 million men and women, including “lay fiduciaries”, who bear the legal responsibility for managing the assets of pension plans, foundations, endowments, health and welfare plans, and personal trusts.
These “lay fiduciaries” generally come from outside the financial services industry, usually don’t get paid for their “fiduciary jobs” and have little, if any, training on what the law requires of them in managing more than $26.6 trillion of investments, according to the Center for Board Certified Fiduciaries (CBCF).
CBCF has completed its first, of what it says will become an annual, survey on lay fiduciaries and the different pools of assets they manage.
“Although lay fiduciaries have extraordinary control over many of our investments, they tend to be underappreciated by both themselves and their beneficiaries,” Allan Henriques, who led the research and analysis team, said in a statement. “This analysis is the first step in helping increase awareness and respect for the scope of their powerful impact.”
Key Findings include
- The total number of lay fiduciaries is at least 17.5 million.
- They manage more than $26.6 trillion.
- Many don’t fully understand their responsibilities and the associated legal liabilities.
- Most have not received formal fiduciary training. In fact, no government agency or regulator has responsibility for training the 17.5 million lay fiduciaries. This is where the Center for Board Certified Fiduciaries can play a crucial role.
- Nearly all lay fiduciaries are concerned about the marked increase in fiduciary litigation.
Of the different pools of assets
- Retirement plans: There are nearly 3 million lay fiduciaries who are managing roughly $20 trillion.
- Foundations/endowments: There are nearly 13 million lay fiduciaries who are managing an estimated $6 trillion.
- Health and Welfare plans: An estimated 181,716 lay fiduciaries who manage $240 billion.
- Private trusts: An estimated 1,620,097 lay fiduciaries (10% of the total group) who have oversight for more than $172 billion.
In conducting the research, CBCF analyzed data from the Internal Revenue Service, Federal Reserve, U.S. Department of Labor, and numerous private-sector publications.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
