ANATOMY Of a Breached Duty-Failure to Diversify by Reducing Uncompensated Risk

© By J. Ben Vernazza CPA/PFS TEP emeritus & Stewart Frank CPA/PFS AIFA

Professional Fiduciary Association of California

San Mateo County California – November 16, 2018

(based on article AICPA June 2017 Tax Adviser www.precisionfiduciary.com/orphan/)

You will learn that by not reasonably reducing Uncompensated Risk (UCR) you are missing out on increased portfolio returns and in the process are breaching your fiduciary duties. The benefits can be quite significant attributable to an ability to sort out the maze of calculations necessary to unravel, identify and replace assets in portfolios to reduce UCR. We find that 90% of advisers are not in compliance, not enjoying sizable return increases, and remain in breach.

Nine (9) case studies are presented. TWO  ARE DISCUSSED IN DETAIL REGARDING FIDUCIARY BREACH

  • Page 7 Attachment F – Equity Split Between 2 Advisers
  • Attachment H – Safe Haven Delegation to Advisers (CA Probate Code)

“Through Investment Policy Statements (IPS) and implementation of their resulting asset allocation, a portfolio’s compensated (systematic) risk strategies are usually well managed, while the management of uncompensated risk is usually ignored.  But, not any more as this presentation shows through examples of actual cases in both the private and public arenas.  Download now pdf:PRESENTATION SanMateo 1file  Apply its principles in order to be in compliance while simultaneously increasing returns and reducing volatility.” 

NOTE: We have added a current example comprehensive Risk & Diversification Report as of year ending 9/30/18 – a $70 million portfolio and a $5 million portfolio from same Midwest advisor. Download now pdf: Client 1&2

Download Presentation PDF: PRESENTATION SanMateo 1file 

Download 9/30/18 Update PDF: Client 1&2

We are Portfolio Consultants and reducing UCR is what we do!