The Institute for the Fiduciary Standard has rolled out 12 best practices for financial advisors to follow and also announced its next step of creating a bill of rights for investors.

These best practices are designed to address trust problems that exist in the industry.

“Advisors need to raise the bar to win back distrustful investors, and that’s what we are aiming to do,” said Knut Rostad, president and co-founder of the institute, speaking at a press breakfast in Midtown Manhattan on Wednesday, when the new initiatives were announced.

“Under the National Association of Personal Financial Advisors code of ethics, many of these best practices have been embodied in our fiduciary principles since 1983,” said Dave O’Brien, a Midlothian, Va.-based RIA and chair of the NAPFA Public Policy Committee. “But there are a couple particular processes that are articulated here, especially around reporting, that would be new.”

Best Practices No. 4 is expected to be among the most challenging for advisors. It recommends they provide a written statement of total fees and underlying investment expenses paid by the client.

“In order to generate reports, either you have to do the accounting or you have to pay someone else to do the accounting, or you buy software programs,” said Bryan Beatty, a member of the Best Practices Board and a financial advisor with Egan, Berger & Weiner in Vienna, Va.

Such a statement would also include any payment to the advisor, the firm or related parties from any third party resulting from an advisor's recommendation.

“There are software packages you can buy off the shelf by subscription service that you can use in your practice,” Beatty said, “and if you put your investments in them, it will generate reports to clients with your fees and you can add your fee on top of that.” Such programs include Portfolio Express and the Morningstar Advisor Workstation.

“It’s possible to disclose,” said Beatty. “It’s not that expensive. The idea of practices is that we will self-report to show that we are living up to the best standards of practice.”

In implementing reporting that would create more transparency, advisors have expressed some concern about potential lawsuits. However, Brian Hamburger, the general counsel to the institute’s Best Practices Board, believes providing clear disclosure and investment guidelines, such as an investment policy statement, would only create liability if advisors don’t work within them.