The New Fiduciary Standard: The 27 Prudent Investment Practices for Financial Advisers, Trustees, and Plan Sponsors »

Tim Hatton, a Certified Financial Planner practitioner and Certified Investment Management Analyst, earned the designation of Accredited Investment Fiduciary at the Center for Fiduciary Studies, the nationally recognized training organization affiliated with the Foundation for Fiduciary Studies. He is founder and president of Hatton Consulting Inc., a registered investment adviser, in Phoenix. Prior to starting that firm, he served thirteen years with Morgan Stanley, most recently as senior vice president of investments. He holds a BS in Business Administration from the University of Arizona.

Financial advisers, trustees, and plan sponsors—in fact, anyone who provides investment advice—may be held to a fiduciary standard of care for the financial well-being of their clients, beneficiaries, or employees. Accountants, attorneys, and wealth managers all need to know about these responsibilities. But what, exactly, is meant by the term fiduciary standard? What must advisers do to be sure their procedures meet legal and ethical standards?

This book identifies the 27 Prudent Practices, organized under the Five Steps, that were developed by the Foundation for Fiduciary Studies—measures that professionals can take to demonstrate that they accept, understand, and are fulfilling the role of a fiduciary.

• Financial advisers and others offering investment advice will add meaningful value to their practice and show tangible evidence of what sets them apart from the pack.

• Attorneys, CPAs, and others serving as trustees will possess the knowledge to determine whether or not their clients' investment portfolios are being managed appropriately.

• Plan sponsors will know what to look for in selecting investment consultants and in giving employees the disclosures and information they need.

The most far-reaching trend in the financial-advisory business today is the move toward a fiduciary standard of care. This book establishes for the industry a credible investment-decision process that will meet the growing expectations of investors and regulators for integrity, transparency, and disclosure of fees and conflicts that affect their returns.

Foreword (Donald B. Trone).

A Summary of the Five Steps and Twenty-Seven Practices.

Preface.

Acknowledgments.

Introduction.

PART ONE: MODERN PORTFOLIO THEORY.

Chapter One: Early Years.

Chapter Two: Practical Applications.

PART TWO: THE FIVE STEPS AND TWENTY-SEVEN PRACTICES.

STEP ONE: Analyze Current Position: Practices 1.1-1.6.

STEP TWO: Diversify—Allocate Portfolio: Practices 2.1-2.5.

STEP THREE: Formalize Investment Policy: Practices 3.1-3.7.

STEP FOUR: Implement Policy: Practices 4.1-4.4.

STEP FIVE: Monitor and Supervise: Practices 5.1-5.5.

APPENDIX I: Sample Investment Policy Statements.

APPENDIX II: Subsequent Performance of Mutual Funds: Past Winners' Uncertain Future.

NOTES.

Continuing-Education Exam for CFP Continuing-Education Credit and PACE Recertification Credit.

INDEX.