“An investment fiduciary is someone who is managing the assets of another person and stands in a special relationship of trust, confidence, and/or legal responsibility.”

Fiduciary 360

A variety of established laws clearly describe a process designed to guide investment advisors as they manage funds for the benefit of their clients. This “Prudent Process” is documented in laws like The Employees Retirement Income Security Act of 1974 (ERISA), The Uniform Prudent Investor Act (UPIA) and The Uniform Prudent Management of Institutional Funds Act (UPMIFA).

This process is summarized in the following seven steps. It follows the International Organization of Standardization (ISO) 19011 audit process as amended by The Centre for Fiduciary Excellence (CEFEX).

The Advisor Must:

1. Know the standards, laws and trust provisions that pertain to each client.
2. Diversify assets to meet their client’s specific risk/return profile.
3. Prepare the Investment Policy Statement (IPS) that describes the process.
4. Use “Prudent Experts” and document the engagement process.
5. Control and account for investment expenses and ensure their reasonableness.
6. Monitor and document the activities of the “Prudent Experts”.
7. Avoid any conflicts of interest and prohibited transactions.

This process is Definable, Repeatable and Defendable.

And while no investment strategy can guarantee positive results, this disciplined process has historically provided investors with the greatest probability of achieving their goals.