Initial discussions find it easier to focus on the obstacles
This is the first of two blog posts that follow up on #236 entitled “Will This Notion Make The World A Better Place?” That post was based on the notion that thought leader and author George Kinder introduced, which he calls Fiduciary In All Things (FIAT for short): “A Fiduciary standard of obligation is required for all institutions (corporate, non-profit, and governmental), to place the interests of all stakeholders, of truth, of humanity, democracy, and the living planet that sustains us, first above their own self-interest.”
I corresponded and had conversations with a group of very erudite friends, to see what they thought of the FIAT notion. With their permission, I then passed those thoughts on to George. Here’s an edited version of the interaction between George and me.
[Also, check the end of this blog post for an invitation to nominate rising stars in the pension industry.]
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DON: Perhaps it’s naivete on my part, but I’m not getting the reactions I hoped for from my professional friends. They’re seeing FIAT very narrowly. Or maybe it’s also that they’re professionals (actuaries and lawyers) and are used to advising others in a fiduciary capacity, and that’s their automatic context.
GEORGE: I think it’s to be expected. Much easier and in a professional role to try to address obstacles than to buy into a vision. I think we should be excited that they have engaged as thoroughly as they have. With that level of engagement, my thought is how to bring them to the next step, as I mentioned in my earlier email.
DON: In particular, I’m getting a reluctance from my friends for the actuarial profession to endorse FIAT. (By the way, these are extremely senior and well-respected members of the profession, and have served the profession in leadership capacities.)
GEORGE: It would be a stunning accomplishment, really amazing, for the actuarial profession to endorse FIAT. A bold vision here, Don, not easily accomplished perhaps, but very exciting.
DON: The most positive response has been: “At the risk of proving again that cynicism is the final refuge of the idealist, I think this concept is both noble and impractical.”
GEORGE: Captures the essence of what one might expect of such a dramatic and idealistic goal as FIAT when suggested to an actuary or lawyer.
DON: One actuarial friend notes: “[The Canadian Institute of Actuaries] has long said that the interest of the public comes ahead of the interest of the profession – “
GEORGE: Wow! I didn’t realize that. Sounds like a great bridge to FIAT, where we clearly articulate the interest of the public, and place those interests ahead of organizations’ self concerns.
DON: He adds: “I think we can all agree that means we need to create sound actuarial practice that protects the solvency of our financial institutions – but who exactly is the public? When we are talking about a registered pension plan – the public is the plan members, also the plan sponsor that could go bankrupt if forced to contribute too much too quickly, and also taxpayers subsidizing the program.”
GEORGE: I agree with you that this approach to actuaries’ fiduciary obligation to the public is so narrow as to miss a huge amount of ‘public interest and concern’ that could be addressed in ways that would be hugely beneficial to society and to the profession. It’s similar for financial advice. I like both/and. Let’s be very particularly fiduciary to our particular audience and legal requirements, but let’s take that for a model for how we/institutions might be toward all aspects of humanity and civilization.
DON: Another actuarial friend said: “This seems unworkable to me. You should discuss it with legal scholars as they will have a better understanding of the practical and theoretical implications than will actuaries.”
GEORGE: Here, of course, your friend has leapt to obstacles, rather than address the vision that FIAT proposes.
DON: He adds: “Here are my specific concerns …
“Does this standard apply to institutions, or to the individuals who act for institutions? Is the pension fund the fiduciary, or the Board collectively, or the individual directors?”
GEORGE: Very good question, and on short view, perhaps beyond my immediate grasp. But I think if all are in the employ of an institution which is subject to FIAT, then all would be expected to act as fiduciaries.
DON: “Who identifies the ‘stakeholders’? Who identifies the interests of the stakeholders – the fiduciaries or the stakeholders themselves?”
GEORGE: A wonderful question of implementation that deserves attention as we embrace FIAT. My initial foray into this is my new startup, The Moules, where we encourage the workforce of a company to find their own personal FIAT as part of their connection to the larger FIAT and to their company. In this way it is a flexible and organic process arising within some obvious stakeholders, the workforce, but extending as they see possibilities to act as FIAT representatives. But this is only an initial foray. I look forward to watching it evolve organically. Surely the answer will be a mix of stakeholders and fiduciaries.
DON: “Who speaks for humanity collectively, or for democracy, or for the living planet? Who identifies their interests?”
GEORGE: All of us. That’s part of what’s so exciting about this moment in history, and about FIAT. All of us globally with global interests, and each of us locally with local interests I would imagine. But again, this is getting bogged down in governance issues before the vision is dramatically embraced. Creating a powerful, perhaps global vision, brings fire, energy and power to its implementation that can’t ever be brought if we focus primarily on obstacles.
DON: “What happens when interests conflict? Suppose the stakeholders’ interests conflict with those of humanity or the living planet? Suppose the interests of some humans conflict with the interests of other humans? Suppose the interests of those now alive conflict with the interests of future generations? Whose interests should the ‘fiduciary in all things’ represent? As I understand it, fiduciaries should not try to represent groups with conflicting interests.”
GEORGE: Of course this will happen! And to me, how we answer it will speak to our engagement with our own humanity, with our place in history, and how we create a sustainable civilization. In The Three Domains of Freedom Workshop I am introducing to businesses, each employee comes to embody their own personal FIAT. Each one of them is different, a different interpretation of the whole. FIAT is first about the whole: the whole of humanity, the whole planet, the whole truth, and the whole democracy. So, however we interpret that as an evolving species, will take a degree of precedence over the individual, and I suspect that principle will hold when there are two ‘interests in conflict’. Within any individual organization, I would expect a team approach, where these questions are addressed, the competing interests weighed. But which is a better system, our current fiduciary to shareholders where negative externalities go to scale globally, or a fiduciary in all things approach, where everyone and particularly every institution bears some responsibility toward humanity, Mother Earth, democracy and the truth, and the artificial power that our hierarchies assume is always tempered by a trustworthiness and humanity that all of us experience, where we assume that each organization is fundamentally humane?
DON: “If they do, what legal exposures do the fiduciaries have as a consequence? Who can sue them… and on behalf of whom? Who can challenge their actions on behalf of humanity, or future generations, or the living planet?”
GEORGE: This is new territory, a new paradigm, and will require new approaches. I don’t know of them all, don’t know all the answers, but believe wholeheartedly in the vision, and the integrity of the fiduciary methodology. Great question that will find its answer as we go forward.
DON: My friend concludes: “I could go on but you get my point. If fiduciaries are responsible to everyone for everything they won’t make better decisions; they will resign before making any decisions. Alternatively, the decisions may be perpetually blocked by lawyers and judges struggling to understand the consequences for everyone, everywhere, forever.”
GEORGE: Solomon once had to choose between two mothers. I suspect for every fiduciary who would resign for fear of their own self interest, you will find a hundred fiduciaries eager to support the values that make humanity thrive: Truth, democracy, our planet and humanity itself. I would certainly be among them.
DON: He concludes: “The safe path for fiduciaries would be to make only decisions that are demonstrably not in the interest of the fiduciaries. They could then be criticized for making bad decisions but they could not be accused of putting their own interests before the interests of others. They will disappoint everyone, including themselves, all of the time.”
GEORGE: What a fearful and cynical response! I suspect rather that fiduciaries will seek to become what their name calls out for. Trustworthy and humane, rather than primarily self interested either for themselves or for shareholders.
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Takeaway
It will inevitably take time for the FIAT principle to be commonly accepted. And it’s natural to think of obstacles that hinder its application. Focus first on the principle itself, and its vision, and the resulting positives that will change the attitudes of all of us, and then it’ll be easier to deal with the obstacles as they arise.
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Nominate a rising star
The World Pension Summit is looking to recognize rising stars (executives with less than 10 years of experience) in the pension industry. The nomination needs to be in by August 30. Here are the details: https://pionline.secure-platform.com/wpsrisingstar
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7 Comments
I have written about retirement planning before and some of that material also relates to topics or issues that are being discussed here. Where relevant I draw on material from three sources: The Retirement Plan Solution (co-authored with Bob Collie and Matt Smith, published by John Wiley & Sons, Inc., 2009), my foreword to Someday Rich (by Timothy Noonan and Matt Smith, also published by Wiley, 2012), and my occasional column The Art of Investment in the FT Money supplement of The Financial Times, published in the UK. I am grateful to the other authors and to The Financial Times for permission to use the material here.
Interestingly, last night I watched David Attenborough’s 2025 documentary, “Ocean” – an example of FIAT.
Yes indeed, protecting our oceans is an excellent example.
Don, FIAT reminds me of Plato’s Republic. The original Greek democracy employed random selection of people given responsibility to make decisions. Plato argued that those who would fill the roles for the best common good would be those who had a strong altruistic nature, putting the needs of others ahead of their own. He also argued that those who expressed a desire for the job would not have the best motivation and should be excluded from the selection process.
Thanks, David. I remember reading about Plato’s notion, but never associated it with FIAT — you’ve connected them very nicely.
I spent the first decade of my career in financial services as a Trust Officer at Canada Permanent Trust Company and we extensively trained to act as Fiduciaries.
Reading this thread I feel you’ve moved beyond how it works in the real world to an idealized concept akin to Global Peace – a wonderful idea but impossible to pull off.
As a fiduciary your responsibility is to whomever hired you and must treat the decisions you make on their behalf as having priority to yours. In practice this means you can’t recommend an investment or an action in which you have an interest even if it would be beneficial to your client.
For example as a Trust Company we could not include our own GICs in their portfolio unless we were paying significantly higher interest than the street, even then you had to get permission.
It doesn’t make you some priest like being ; just someone who always puts the beneficiaries of the trust ahead of yourself
Your description of being a fiduciary is very clear and down-to-earth. And it shows why it won’t be easy to bring FIAT to life where it isn’t legislated.
In a conversation we’ve had since you made your comment, you pointed out another issue, which is that being a fiduciary today doesn’t scale: it takes place on a one-to-one level. That’s why George explicitly seeks to bring in FIAT as a team approach within organizations. Again, not easy. But think of the positives if we could make it work.
One last reaction from me. You’re absolutely right, FIAT as a goal is as difficult to imagine as Global Peace. Neither will ever be achieved 100%: we are, after all, human beings, with all the attendant animalistic self-centred emotions. But I don’t think it’s a failure if it isn’t present to the extent of 100%. Think of the time, centuries ago, when war was the norm but peace broke out occasionally: isn’t the world a better place with peace the norm even though wars break out? And that doesn’t mean the notion of peace is too perfectionist to hold: the world is a much better place for it. So too with FIAT. The world would be a better place if FIAT held widely, even if not 100%.