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Fiduciary practice today is shaped by the lore of Modern Portfolio Theory and the Neoliberal Financialization of Fiduciary Money that began in 1972.

50 years on, it is time to stop and reflect on how well things are going.

A moment’s reflection will tell us that things are not really going all that well.

Yes, we have great material abundance and technological innovation, but we also have a cascading cavalcade of social failings that include:

• Short-termism;
• Economic Elitism;
• Corporate Gigantism;
• Financial System Instability;
• Retirement System Unreliability;
• Social and Environmental Unsustainability;
• Dark Money Capture of Politics and Public Discourse;
• Political Divisiveness Degenerating Towards Violence; and
• Institutional Inability to Take Action on Climate, and other challenges in our changing times that require Humanity to take action at the scale of climate, and in the time of climate, as Earthlings living on one shared Earth.

We need to make a change.

Still, the journey from where we are now to where need and want to be is not a straightforward, linear and logical sequence of causes and consequences that easy to step through.

Instead, the journey is a circuitous, nonlinear, quantum paradigm shift.

The best tool humans have invented for making a shift like that is conversation through which we can start where we are and jump to what interests next, sometimes meandering off to explore tangents, without regard to logical connection, while we build up a new frame within which the logic will eventually manifest.

Legislation

Restating and updating the law of fiduciary duty, which is not being honored in contemporary fiduciary practice.

The law provides the rules by which the “game” of Finance gets played.  We need and want these rules to be clear, correct and generally accepted.

The main rule for Fiduciary Finance is Fiduciary Duty.

The general rule here is prudence in the exercise of fiduciary powers in undivided loyalty to fiduciary purpose.

That general rule is, well, general. We could do with a little bit more specificity, as to how that general rule of fiduciary duty applies to the specific case of Fiduciary Money.

• What are the fiduciary powers of the institutional fiduciary owners of intergenerational fiduciary money?
• What is the fiduciary purpose of institutional fiduciary ownership of Intergenerational Fiduciary Money?
• What is prudent in the exercise of those powers?
• What is loyalty to that purpose?

Virtually none of our existing rules of fiduciary duty were developed in the context of institutional ownership of intergenerational money.  They were all developed to hold fiduciaries accountable as alter egos for one or more named individuals, all of whom have to be alive at the time the duty arises and for as long as it continues.

Pensions & Endowments are something new. They just keep going. Across the generations. And their purpose is public, not just personal.  Society creates and sustains both Pensions and Endowments as social goods, because they are both recognized within society as providing important social benefits to qualifying individuals that it is important to all of society that these individuals receive.

So there are unique features to the power and purpose of Pensions & Endowments that are different from “grandpa’s trust for junior’s college”; and there should be equally unique rules about the requirements for prudence and loyalty appropriate to the uniqueness of these social institutions.

For example, a Duty of Impartiality across the generations, which becomes a Duty to the Future for all of society.

And a Duty to Negotiate, since that is a power unique to these institutions, that becomes a Duty to Negotiate for now and later, both equally, mediating the tensions between opposites for current and future qualifiers and for all of society that supports these institutions in the public interest.

This then becomes a Duty of Care that requires reckoning with the impacts of present choices on future possibilities.

These and other special rules are implied in the law. They need to be made explicit. Especially where existing legislation is less than clear, and maybe even contrary, to these rules.

Litigation

Long-standing practices can be difficult to change, institutionally, even when those practices contribute to a failure of institutional integrity.

Perhaps even more so.

Litigation can be an effective way to force a reconsideration of established practice within institutions that has deviated from institutional authenticity, and to sweep away the inertia (and self-interest) of past practice to necessary changes in behavior.

It might be said that what we really need to is sue the system. Of course “the system” is not a legal person who can be hauled into court and made to answer questions before a judge and jury.

More importantly, perhaps, “the system” is not broken and cannot just be fixed. The real problem is the standard practice today is built on the social narrative of Neoliberalism that is failing to delivery a properly fiduciary experience. We need a whole new narrative, of authenticity and integrity and prudent loyalty of institutional power to intergenerational purpose.

Litigation can help us articulate and validate that new narrative.

The challenge for litigation is matching legal persons who have standing to sue and can be sued, as plaintiff and defemdant, respectively to legal theories of liability and remedy.

We are researching a number of possibilities, including:

1. fiduciary duty;
2. public trust;
3. public nuisance;
4. product liability;
5. breach of contract;
6. malpractice/negligence;
7. fraud; and
8. tortious interference with advantageous business relationships

Theories of liability 1-6 might arguably apply to Pension and Endowment fiduciaries in their institutional capacities, supporting claims for declaratory and inductive relief to compel behavior change.

Theories 7-8 might arguably apply to Asset Managers for money damages, to disgorge ill-gotten gains.