John Rogers: The Dawn of Fiduciary Capitalism
The costs of a failure of trust
Social impact
Fear and mistrust drive defensive investing
Long-term consequences of short-termism
Savings gaps mean:
- longer working lives
- lower quality of life
- intergenerational stress
What is a fiduciary?
“A fiduciary is someone who has undertaken to act for and on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence.” – Lord Millett, Bristol and West Building Society v Mothew
Changing balance of power
Top 1,000 global institutional investors account for $25 trillion
Fiduciary agenda
- Liability-driven
- Minimize cost
- Long term
- Universal ownership
Liability-driven
“The majority of investors (87%) believe that meeting their own unique investment objectives is more important than outperforming relative to their chosen benchmarks.”
A survey of institutional investors who collectively have 2.5 million employees and more than $500 billion in assets under management. Commissioned by Northern Trust, Greenwich Associates.
Universal Ownership
- Size
- The whole economy, forever
- Externalities (bad & good)
- If you can’t sell – engage as owner
Why fiduciary capitalism may fail to launch
- Governance/compensation/agency issues
- Transparency failures
- Dispersion & laziness
Why does this matter?
- Better owners
- Lower volatility
- Externalities – sustainability
- More efficient financial system
- Stakeholders – not shareowners
John Rogers On The Future Of Finance: A New Era Of Fiduciary Capitalism Via CFA Institute
