Perspectives: Fiduciary Standard & Knowledge-Based Competence

Will the Fiduciary Rule improve retirement outcomes?  It’s a reasonable question and the basis of much on the current discussion about the DOL Fiduciary Rule.

With our View Across The Silos℠ Perspective – we believe there’s another question that must also be asked: Does the fiduciary standard include, or not, a knowledge-based competence standard?

Can you be a fiduciary and use a dart board to select stocks?

The respective answers to these questions are: No and Yes.

Did you, like me, expect that it would be Yes and No?

Fiduciary or not, we should be asking what should be the basis for a minimum standard of competence for retirement planning?  Retirement planning should not be confused with product qualification processes.  Both have a seat at the table.  Confusing one for the other is the problem.  Boomer demographics, pushing 10,000 new retirees in front of the industry on a daily basis, creates a continuously increasing imperative to start retirement planning with the client - from a fiduciary or suitability perspective.  And arguably, client-focused, as opposed to product-focused competence matters for all and most of all.

Our approach is RIIA’s Retirement Management Analyst® designation (RMA®), which provides a framework for expert professionals to develop a retirement plan given the facts and circumstances of the client. The RMA provides tools such as the Procedural Prudence Map that starts with the client.  The approach is equally valid under either a fiduciary or a suitability standard.

That’s the key point.  Fiduciary or suitability standards are meaningless without client-focused competence in addition to traditional product-focused competencies.


Francois Gadenne
Co-Founder, Chairman & Executive Director

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