When the Stock Market Crashes, What Should a Fiduciary Do?

by Ron W. Hagan

If you are like most retirement plan and foundation executives who have contacted us in August, you have probably been overwhelmed with "breaking news" emails and cable news commentary about the stock market's reaction to the shakiness of the U.S. economy. With this much news, especially adverse in nature, it is easy to swing on a pendulum from over indulgence on one end, to a mental callous on the other. How do these short term market fluctuations, as well as longer term forecasts, impact fiduciary decisions, and conduct? Now, let's bring it on point relative to your role, a member of an executive team responsible for the oversight of pension assets or a non-profit board accountable for donor contributions. How do these short term market fluctuations, as well as longer term forecasts, impact fiduciary decisions, and conduct? While this is a broad and deep question, the answer is a relatively straight forward one, but not necessarily an easy one. Fortunately for us who sit in the fiduciary chair, the boundaries of liability are established. If we stay in those borders and exercise faithfully in our roles, we will be fit and prepared to handle whatever comes our way. If we remain dedicated to the disciplines and workflow processes, we can trust that the fiduciary outcomes will exceed expectations and legal requirements. While this doesn't eradicate the sting of the market losses, it does provide the confident peace of mind that the hand is at the wheel and the assurance that you have not missed anything. One of our clients said it very well when he stated, "my fiduciary concern is not tied to what I know or what I am doing, but my anxiety is created by what I don't know or what we aren't doing." Maintain high proficiency in the disciplines of fiduciary duty; governance, administration, investments, and controls, and trust the disciplines. It builds the fiduciary muscle to endure and persevere in your role. Roland|Criss has a program to help you achieve a greater awareness of the fiduciary disciplines. Contact any one of our senior professionals.