On being a leader and a fiduciary

When preparing to depart from a meeting or other encounter with a senior officer, it is a still-practiced naval tradition for junior officers to make the request, “By your leave, sir/madam.”

I share that tidbit with you as I dust off my knowledge of naval practices in preparation for returning to the Coast Guard after nearly 20 years; I have accepted an appointment to be director of the U.S. Coast Guard Academy Institute for Leadership in New London, Conn.

No, I am not leaving the investment industry. (Some, I hope, may consider that good news; others, undoubtedly, will be greatly disappointed.) My Coast Guard appointment includes a provision that allows me to continue my fiduciary teaching and speaking through the Foundation for Fiduciary Studies.

How odd a match is investing and seagoing leadership? Truth be told, I believe there is a strong connection between my two work worlds.

Let me explain. Think about the following qualities: honesty, courage, integrity, stewardship, respect, commitment, covenant, trust, ethics, intelligence, perseverance, vision, expertise, teamwork and decisiveness.

Which of those words would you associate with “leadership” and which with “fiduciary responsibility”?

Perhaps you think that all the words could be associated with both. And that is the point that I want to make: Leadership and fiduciary responsibility are intertwined.

A great investment adviser should possess the characteristics of a great leader. At the same time, a great leader should possess an understanding of the fiduciary concepts of stewardship and covenant.

If you aren’t viewed as a leader in the eyes of your clients, you will never earn their trust and confidence, and you will never be an effective investment adviser; you will remain an order taker for investment products, and nothing more.

Leadership constitutes the innate qualities of a professional that can’t be legislated, tested, measured or audited by regulators. It is about projecting ethical and objective advice, and convincing all parties involved with the investment process to follow.

It also is about honing investment skills and mastering the art of communication, command and control. Leadership requires the moral courage to motivate trustees and investment committees to do what is right, even despite self-interests and/or corporate or political considerations.

Great leaders, as with great investment advisers, constantly question the status quo, tear away at arcane barriers and never tire of the pursuit of learning. They are bold in their visions, great at storytelling — and lousy at record keeping.

When they make mistakes, they make big mistakes, but only in the pursuit of stuff that matters.

Great investment advisers and leaders also run in the same pack, are networking fanatics and are passionate about nurturing the next generation. They seek out other action figures and, if given a choice, would rather dine with a rebel than a regulator.

Most important, great leaders and investment advisers create their own opportunities and are better prepared to deal with unique challenges and the unexpected. They know that it takes all kinds of people to build a successful team and are as comfortable jabbering with programming geeks as they are with titans of industry and government.

My mission for the Coast Guard will be to develop a body of “leadership” knowledge similar to what I created for the subject of fiduciary responsibility. Specifically, I want to identify and define the practices that characterize the Coast Guard’s unique leadership style, and develop and deliver training programs on those leadership practices.

Unfortunately, taking on additional duties means shedding certain obligations. My column next month may very well be one of my last for the foreseeable future.

If so, I am duty bound to request, “By your leave.”

Don Trone is president of the Center for Fiduciary Studies and chief executive of Fiduciary360 LP, both in Sewickley, Pa.