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.