Allan Henriques, Kathleen McBride, David J. Bromelkamp, Trevor Merrill, and Tony A. Michael
Finding the Elusive Lay Fiduciary
No one knows exactly how many Lay Fiduciaries exist, even though they’re legally responsible for prudently managing trillions of dollars of investments.
And it’s not an easy task to locate them.
In fact, many of them don’t even discern their fiduciary stature or the legal liabilities they face.
Whether they recognize it or not, this eclectic group legally has decision-making authority, oversight and prudent investment management responsibilities for such diverse entities as our retirement plans, nonprofit organizations, health and welfare benefit plans, and various types of trusts and legal authority.
We entrust Lay Fiduciaries with our retirement plans and our gifts to our favorite charities, and they are in charge of our investments and contributions. And if you sponsor a retirement or health and welfare benefit plan for your employees—or serve as a board member or decision-maker for a nonprofit, then you’re likely a Lay Fiduciary.
Typically, Lay Fiduciaries hold “real jobs” (for which they receive compensation) in addition to their “fiduciary jobs” (for which they may have little training and generally don’t receive compensation).
Nonetheless, these “fiduciary jobs” in the United States are responsible for managing an estimated $26.6 trillion of our investments.
All of these generally well-intentioned individuals have at least one thing in common – they’re legally responsible for the prudent management of investments for the benefit of someone else.
Despite these legal responsibilities, there are few legal requirements for training them to do their “fiduciary job” – they’re simply held to the highest standard under the law.
In many instances, they’ve never even been told that they are fiduciaries – or what that means.
Read the full research paper here.