Evensky, Others Offer One-Page Solution To Advisor Fiduciary Debate

“I think the oath is brilliant in its simplicity,” said Skip Schweiss, managing director of advisor advocacy at TD Ameritrade Institutional. “If you put this oath in front of [clients], it’s not so hard to understand.”

But is this all important to clients?

Oath or no oath, fiduciary expert Don Trone says clients don’t really care.

“All the legitimate surveys … have demonstrated that the public cannot discern the difference between a suitability or fiduciary standard, nor do they care,” said Trone, CEO of 3Ethos, a fiduciary training firm.

What clients want is to be able to trust the person they work with, Trone says.

“So if an advisor feels compelled to provide an oath or pledge, they have not done an adequate job of demonstrating to the client or prospect that they’re worthy of the clients’ trust,” he says.

Evensky doesn’t disagree with that.

“Trust is another whole massive subject,” he says. “The goal of the oath was to define the relationship between advisor and client. … Most clients assume whomever they’re dealing with is living up to [a fiduciary duty]. It will help distinguish between those who are and are not.”

That distinction may be harder to make after the DOL rule goes into effect, warns Knut Rostad, a co-founder of the committee as well as its subsequent spin-off, the Institute for the Fiduciary Standard.

Under the DOL rule, “more and more brokers will be able to claim fiduciary adherence, then get around it [with] fine print” in customer agreements, Rostad says.

The institute, which was established to help advisors meet fiduciary standards, has its own set of  principles (similar to the oath) and next year plans to reach out directly to investors about what they should expect from advisors.

In September, the Institute also finalized a 12-item list of best practices that advisors can follow—practices that investors can have verified, Rostad says.

“Verifying [compliance] in some form is simply required in this day and age because of skepticism and distrust,” he says.

For example, advisors should be able to show clients a process for managing conflicts and choosing investments, they should have a commitment to professional education, and ensure they follow industry best practices.

But even a verification system only goes so far, says Philip Chao, founder of Chao & Company Ltd., a retirement plan specialist, and a board member of the Institute.

“How do I [as a client] know that you have met that oath you made to me?” Chao asks. After all, advisors may succumb to a “self-reporting bias” when they hold themselves accountable to clients, he says.

“I just don’t think there’s an easy solution,” he says.

But to some observers, Evensky’s oath is the simplest way to communicate the basic fiduciary standard to clients.

“Perhaps over time it will raise the awareness” of the public, Evensky says.