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How do I structure an investment portfolio under the fiduciary standard?

A fiduciary should balance risk and return objectives and make investment decisions in the context of the client’s portfolio as a whole. A fiduciary should decide what risk is appropriate for the portfolio and in the best interest of the client, taking into account all relevant factors.

  • A fiduciary should consider circumstances specific to the relationship, including, but not limited to:
    • The size of the portfolio
    • The nature and estimated duration of the fiduciary relationship
    • The liquidity and distribution requirements of the portfolio
    • The expected tax consequences of investment decisions and strategies and of principal and income distributions
    • The client’s income and liquidity needs
    • The expected total return from income
    • The expected appreciation from capital
    • Other resources/income available to the client
  • A fiduciary should consider circumstances applicable to all investments, including but not limited to:
    • General economic conditions
    • Inflation and deflation
    • Political risk
  • A fiduciary should consider the overall cost of the investment strategy.
  • A fiduciary should consider the overall investment costs and only incur costs that are reasonable.

Use the Prudent Investor Checklist to document your process.

 

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