Defining Fiduciary Duty: Is it Too Vague?
Ron A. Rhoades, JD
Private Wealth Manager
Director of Research
Chief Compliance Officer
Joseph Capital Management, LLC
Because fiduciary duty is a principles-based rather than rules-based standard of care, some claim it is vague. But at the Fiduciary Forum in September 2010, attorney and wealth manager Ron Rhoades explained why it is important that we not displace the principle of acting as fiduciary, of adopting the clients’ ends as your own. Fiduciary duty is indeterminate, but it’s not vague, and part of the reason it must be kept open-ended, as a principles-based standard, is because fraud is infinite; fraud adapts. Based on three primary duties, the duty of due care, duty of loyalty and duty of utmost good faith, fiduciary duty is guided by centuries of common law, and decades of U.S. state case law and SEC guidance.