Introduction

““It’s time to get ready for bed.” Those were words of both dread and excitement for me as a young boy. I didn’t want to go to bed, but I did want my mother to read me a bedtime story. My favorites were Aesop Fables: The Hare and the Tortoise, The Boy Who Cried Wolf, The Ant and The Grasshopper, The Wolf in Sheep’s Clothing, and so on. It’s been almost half a century since she last read me those stories, but I still remember each tale and the underlying moral. “Slow and steady wins the race.” “No one will believe a liar, even when he is telling the truth.” “Save in the good time to prepare for the hard times.” And, “Appearances can be deceiving.”   To me, stories have always been the best way to communicate ideas. That is why this book has been written as a series of amusing and thought-provoking anecdotes designed to help fiduciaries visualize, understand, and remember the often complicated and confusing requirements of their position. I like to think of it as Fables for Fiduciaries.  

Purpose  

Obviously, this is a book for fiduciaries, but just who is a fiduciary? Simply put, a fiduciary is anyone responsible for managing someone else’s money. But how do they do that? What are they supposed to do? Are they legally bound to behave in certain ways and follow certain procedures? What differentiates a good fiduciary from the bad and the ugly ones? The purpose of this book is to accurately answer these questions in an enjoyable and entertaining manner. Equipped with these answers, fiduciaries will be better able to fulfill their duties to the individuals or entities whose money they are managing; and in the process limit their personal financial liability. Since it is written at a level which laymen should be able to comprehend, it is hoped that attorneys, CPAs, pension administrators, and other professionals who advise clients who are fiduciaries, will give copies of this book to those clients.  

The Uniform Prudent Investor Act  

The Uniform Prudent Investor Act (“UPIA”, “Act”) “…regulates the investment responsibilities of trustees” of private trusts. While its terms apply to trusts, its standards are “…expected to inform the investment responsibilities of directors and officers of charitable corporations.” Its principles are even “…applicable to [pension] fiduciaries.” Therefore, this book uses the Uniform Prudent Investor Act as the main guide, with reference to other laws, for defining the standards of prudent fiduciary investing. It is my belief that all fiduciaries should understand the Uniform Prudent Investor Act because its standards form the basis of the interpretation of prudence for fiduciaries regulated by that Act and by other fiduciary laws.  

The Book Sections  

The book is organized into eight sections. The first examines what you need to know. The second is about where to go to get what you need to know. The third shows the consequences of knowing but not doing. The fourth explores the duties of a fiduciary, which require action as well as knowledge. The fifth is on knowing what works and what doesn’t. The sixth address the battle between knowledge and emotions. The seventh is about my heroes who know what really is important in life. And the eighth is a reminder that the standards of prudent fiduciary investing are objective and, therefore, knowable.  

Limitations  

The book touches on most, if not all, of the duties, responsibilities, and requirements of the Uniform Prudent Investor Act, both stated and implied. However, the book is not intended to be used as a tool for the legal interpretation of the Act.  

About the Writing Style  

I am a fiduciary and I take my duties very seriously, but I refuse to take myself too seriously. You may be a fiduciary too. Hopefully my stories and self-deprecating humor will keep you entertained, but, more important, I hope they will help you understand and remember your legal and moral responsibilities as a fiduciary. So if these fables make you chuckle -- that’s good; if they make you think -- that’s better; and if they inspire you to do better -- that’s the best.