Sheriff Andy Taylor (Andy Griffith in “The Andy Griffith Show”), Mike Brady (Robert Reed in “The Brady Bunch”) and Steven Douglas (Fred MacMurray in “My Three Sons”) each represent the iconic father—and the perfect fiduciary.

The month of June brings Father’s Day. The loyalty of dads represents the same kind of loyalty a fiduciary must have toward a client (or “beneficiary,” in keeping with the traditional trustee definition of fiduciary). This is a shade different than the fiduciary caring mothers have provided.

Remember when you came home after striking out in the big game? Mom would caress you. It made you feel good. It didn’t make you a better ballplayer, but it did take away the sniffles—at least until the next game when you’d invariably strike out again and the process would repeat itself.

Dad had a different approach. After he yelled at you for crying, he’d bluntly assert, “What do you expect? You never practice.” With tears still in your eyes, he’d drag you out into the backyard to practice and pitch to you until you hit the ball consistently. You hated it. You much preferred the loving caress from mom versus the tough love workout dad put you through.

But at the next game, when you swing the bat and hit the ball into left field, that smile on your face as you excitedly run halfway to first is all the thanks dad ever needs. He knows you’re one step closer to confronting the real world—independently, without his (or mom’s) help.

Sometimes a fiduciary has to display this same sort of tough love. Think of how Charles Kane’s trustee in Citizen Kane limited what the young immature Kane could do with his inherited wealth. In the same way, all fiduciaries must remember that part of their duty to loyalty means sometimes saying “no” to the beneficiary. In the world of fiduciary, “the client is always right” represents the ultimate breach of fiduciary duty.

Here’s a common example—and it helps explain the difference between an “adviser” (who always must act as a fiduciary) and an “advisor” (usually a broker, i.e., someone not subject to a fiduciary duty). Suppose your 25-year-old IRA client is incredibly risk averse and tells you so. If you’re not a fiduciary, you can accept the client’s desires and invest the IRA in bonds, CDs or whatever suitable “risk-averse” investment you can think of.

If you’re a fiduciary and you do this, you’ve just breached your fiduciary duty. Why? Because the beneficiary of the IRA is not the client of today, but the client of 35 years from now (i.e., when the client can withdraw from the IRA without penalty). A good fiduciary tosses aside the client’s personality traits and focuses solely on the time horizon, i.e., the most relevant factor for this particular IRA.

Now, tough love doesn’t mean treating your clients like Vince Lombardi treated his football players. No, the best TV dads delivered their tough love with a soft voice. Try it.

Instant Insights /

Fiduciary lessons my father taught me

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