The Advisory Career

Financial Advisors: Key Principles for Best Practices

New Institute for the Fiduciary Standard establishes ‘core principles’

Brian Hamburger appointed General Counsel to Best Practices board

BOSTON–(Marketwired – September 17, 2014 7:43am) – The Institute for the Fiduciary Standard,, a Washington think tank dedicated to upholding the highest standard of care that can be delivered by financial industry professionals, released a paper Monday highlighting what it believes to be the core guiding principles for those advisers holding themselves out as true fiduciaries.

The paper, titled “Key Principles for Fiduciary Best Practices and An Emerging Profession,” outlines guiding principles clearly and contrasts the difference between fiduciary advice and brokerage sales practices.

Institute president, Knut A. Rostad, stated “The ‘Best Practices’ initiative has struck a chord among many leaders in the industry. The time is right for fiduciary advisers to restate in the clearest possible terms in the public square what ‘Best Practices’ mean and why they matter to investors.”

New Best Practices a departure from Adsvisors Act of 1940

The paper sets out the principles on which ‘Best Practices’ should be based and how they sharply differ from the principles on which brokerage sales practices are based. Not simply differences of nuance or slight degree, they are fundamentally opposing views on the very foundation of the Advisers Act of 1940, and views on fiduciary principles expressed by the most respected economic thinkers and jurists of our time, from Adam Smith to Justice Harland Fiske Stone.

The fiduciary standard has been called “the highest standard under the law.” The best practices will incorporate broad fiduciary duties in accordance with common law, statute, regulatory opinions, and the Advisers Act of 1940. The best practices will also reflect the high aspirations for the fiduciary standard expressed in the landmark Supreme Court decision, SEC vs Capital Gains Research.

While so many firms focus on regulatory compliance as a minimum threshold, I know that best firms want standards to aspire to

The Institute also announced the appointment of Brian Hamburger, Founder and CEO of MarketCounsel, to serve the Best Practices Board as General Counsel. Hamburger is widely respected as an SEC compliance expert and relentless champion of independent fiduciary advisers.
Hamburger said, “It is an honor to be asked to serve as General Counsel to this esteemed board. The Best Practices Board has an ambitious goal in advancing the profession of investment advice. While so many firms focus on regulatory compliance as a minimum threshold, I know that best firms want standards to aspire to.”

The Best Practices Board convened on September 15th to discuss the Six Core Fiduciary Duties for Financial Advisors, as outlined in the paper, and seeks to complete its work by year’s end. It will put the complete set of best practices out for public comment. This will be followed by plans to accredit and validate practitioners who meet them.

Among paper key findings:

  • Character is the distinguishing mark of a profession
  • Criteria for providing fiduciary advice fall into “technical” and “ethical” categories
  • “Caveat Emptor” and “conflicted advice” are the distinguishing marks of brokerage sales practices advocated by lobbyists
  • The “Buffett Rule” clearly distinguishes fiduciaries
  • The definition of “suitability” should be “investors: watch out”


About The Institute for the Fiduciary Standard
The Institute for the Fiduciary Standard is a non-profit organization formed in Virginiato benefit investors and society by advancing fiduciary principles through research, education and advocacy. For more information: