Inside Plan B
Fiduciary Standards
An investment fiduciary is any person or organisation who has a role in managing someone else’s money.
The role of a fiduciary is to manage a prudent investment process, without which the components of an investment plan cannot be defined, implemented or evaluated. Statutes, case law and regulatory opinion letters dealing with investment fiduciary responsibility further reinforce this important process.
Plan B believes that every fiduciary needs to understand the breadth and scope of their duties and responsibilities. In our opinion this is often not the case, both in respect of licensed advisers or the many thousands of lay trustees in Australia.
Plan B would be happy to demonstrate how we comply with these standards, or assist you in assessing your own practices or those of a “prudent expert” you currently use.
Plan B is CEFEX certified and complies to fi360 standards to the highest possible level. More information about these organisations is listed below.
CEFEX
CEFEX is a global initiative to promote fiduciary best practices in the Investment Management industry.
CEFEX is an independent assessment and certification organisation. CEFEX works closely with regulators, self-regulators, the investment community and the fiduciary industry to provide comprehensive assessments as measures of risk and trustworthiness of Investment Fiduciaries.
As a certifying organisation, CEFEX provides an independent recognition of a fiduciary's conformity to all Fiduciary Practices. It implies that a fiduciary can demonstrate adherence to the industry's best practices, and is positioned to earn the public's trust. This registration serves investors who require assurance that their investments are being managed according to commonly accepted best practices.
CEFEX has proposed a set of Practices recommended by the asset management industry to reduce fiduciary risk. CEFEX uses a consultative approach to develop and evolve the Practices, similar to that used by international standards development organisations.
fi360
fi360 Australasia is the region’s representative of CEFEX (Centre for Fiduciary Excellence), an independent assessment and certification organisation that works closely with regulators, self-regulators, the investment community and the fiduciary industry, to provide comprehensive assessments as measures of risk and trustworthiness of investment fiduciaries.
As a certifying organisation, CEFEX provides an independent recognition of a fiduciary's conformity to all Fiduciary Practices. CEFEX certification implies that a fiduciary can demonstrate adherence to the industry’s best practices, and is positioned to earn the public’s trust. This registration serves investors who require assurance that their investments are being managed according to commonly accepted best practice.
CEFEX has proposed a set of practices recommended by the asset management industry to reduce fiduciary risk. CEFEX uses a consultative approach to develop and evolve the Practices, similar to that used by international standards development organisations.
The Practices are organized under a four-step Fiduciary Quality Management System. The steps are consistent with the global ISO 9000 Quality Management System standard, which emphasizes continual improvement to a decision-making process:
Step 1: Organise
Step 2: Formalise
Step 3: Implement
Step 4: Monitor
For each Practice, one or more Criteria are provided to define the Global Standard of Excellence associated with the Practice.
The Practices represent the minimum process prescribed by law; the Criteria represent the details of the Global Standard of Excellence. In addition, a Suggested Procedure is provided to demonstrate how each Practice could be implemented.
fi360 Australasia provides resources for fiduciaries and guidance on the application of the practices for the region and also serves as an independent rating and certification agency.
Top 8 Fiduciary Questions to ask your Financial Adviser:
- Has your adviser provided you with a written Investment Policy Statement, updated at least annually?
- Does your adviser meet with you at least annually to review portfolio performance and determine whether goals and objectives are being met?
- Does your adviser personally review portfolio performance reports every quarter and measure against predetermined benchmarks?
- Has your adviser reviewed the possible range of returns your portfolio may experience over a one, three and five-year period, and reviewed the range at least annually?
- Has your adviser provided a written document describing the due diligence criteria for selecting and monitoring investments in your portfolio?
- Does your adviser provide a quarterly performance report detailing inception-to-date, year-to-date and quarter-to-date returns after all fees?
- Do you have a written document detailing investment fees and expenses?
- Are investment portfolio gain/loss statements available on demand?
These questions are derived from Prudent Investment Practices: A Handbook for Investment Fiduciaries published in 2003 by the US-based Foundation for Fiduciary Studies. The publication outlines 27 essential investment practices that all investment fiduciaries should follow.