From time to time we refer to "fiduciary service providers," implicitly contrasting such providers with their non-fiduciary counterparts and competitors. As we see it, fiduciary status isn't just a legal distinction; it's a set of core principles, a worldview that guides individuals and firms in the marketing and delivery of financial services.
In a recent issue of InvestmentNews, Fiduciary360 CEO Blaine Aikin noted that "Fiduciaries owe a duty of loyalty to the beneficiaries they serve. But frequently, they find their commitment to the principle of self-sacrifice tested by conflicts of interest." To advance his argument, Aikin cited recent GAO research on conflicts of interest in traditional pensions and 401(k)-style retirement plans. Here's a summary of GAO's findings:
Though GAO's analysts crunched numbers on defined-benefit plans, their findings apply to the defined-contribution (DC) world as well:
As Aikin notes, the best option by far is for service providers to avoid conflicts of interest in the first place. If such conflicts exist, he concludes, "anything less than full disclosure is unacceptable." Indeed.
Blaine F. Aikin, "For Fiduciaries, Loyalty is Everything," InvestmentNews, April 12, 2009
Charles A Jeszeck, "Conflicts of Interest Can Affect Defined Benefit and Defined Contribution Plans," Government Accountability Office, March 24, 2009