My presentation to the FI 360 Conference in May 2008. I was told by the conference organizer that it was the highest rated presentation at the conference.

1. From Process Back to Thought Process
A Perspective on the Emotional Intelligence of Serving in a
Fiduciary Capacity.
Offered By: Wayne H. Miller
Chief Executive Officer
Denali Fiduciary Management
FI 360 National Conference
May 2008

2. The Human Condition
• Jim is married to his fifth wife.
• He’s a smart guy and financially very successful.
• Jim called me one day in a hyper excited state.
• He told me he had finally figured out “what it is
with women.”
• I asked Jim if he recognized that he was the only
common ingredient in his five marriages.

3. The Human Condition
• He was genuinely perplexed by the question
and continued to speak of his discovery.
• He never paused for a moment to ask what I
meant or why I asked that question.

4. The Human Condition - Exposed
• Jim was unable to efficiently process information
regarding his relationships with women.
• He had no awareness of how his own
shortcomings influenced his assessment.
• Jim’s sense of a new discovery missed this point.
• He has an emotional blind spot.
I suspect Jim’s four former wives already knew that.

5. The Human Condition - Exposed
Perhaps most importantly:
Jim missed the opportunity to learn something
that would have been helpful to him – and others
around him.

6. The Human Condition - Exposed
• To everyone other than Jim, his blind
spot was obvious.
• We call them “emotional blind spots”
because these reflect the emotional
foundation of a person’s identity.

7. The Human Condition - Exposed
• Someone with an emotional blind spot
erroneously attributes meaning to information.
• A person lacking that emotional blind spot (a
dispassionate observer) recognizes this
attribution as a mistake.

8. The GOOD News:
Everyone has emotional blind spots.
Therefore, we are all on a similar playing field.
We are all blind to something.
The BAD news:
“Everyone” includes you (me too).
In general, the higher the IQ, the tougher it is
to get this.

9. Antidote to the Human Condition:
"We can't solve our problems by
using the same kind of thinking
we used when we created them."
-Albert Einstein

10. Its Like Gravity.
A person’s willingness to realize THAT:
• Einstein’s statement is an observation not a
philosophy.
• It applies to them (not just others) and …
• HOW it applies to them.
• Reflects the emotional intelligence (EI) of that
individual.

11. 1 + (n+1…) = > Chaos
• When individuals gather – their collective
blind spots coalesce.
• Productive communication becomes more
challenging with each new person added
to the gathering.
• Form a committee and you now have a
culture subject to this influence.

12. Welcome to the world of
fiduciary governance.

13. Predominant Identity In A Fiduciary Culture.
“We are good people here.”
• This identity serves as an emotional shield.
• Its presence discourages the receptivity or
digestion of information perceived to be
counter productive to survival of the identity.
• It is the life blood of “group think”.

14. “We are good people here” …
• Maintaining the group identity is the
group’s (unspoken of) highest priority.
• The efficiency and effectiveness of
retirement plan management practices
will suffer if this identity is unchallenged.

15. “We are good people here” …
• … is why fiduciary governance is so critical.
• Sound governance promotes fiduciary excellence.
• Embedded in it are processes that create
distinctions between:
− purpose and identity
− learning and resistance
− substance and appearance
− action and talk

16. Perspective
Evolution:
In biological sciences, the name of the process
that describes how various influences in the
environment impact the nature and presence of
genetic material within a given population.
Evolution is random not purposeful.

17. Evolution: A Fiduciary Imperative
Our Intention: make fiduciary processes purposeful.
Fiduciary “evolution”: Champion the
proliferation of single thought process that
accepts the premise of guardianship as
quintessential to the role …
… and put no constraints on the application of
that premise.

18. Observations
• In general, every actor on the fiduciary stage
is conflicted.
• Some conflicts are overt - some not.
• An examination of the conflicts illustrate that
it is the thought process of those actors that
generates an on-going challenge for a
fiduciary to be Purposeful.

19. Purposefulness and Process
If your fiduciary Processes allow for the
accommodation of your Purpose,
for whatever expediency you think important,
you will be acting in a manner that is counter
productive to the duty.
Is a fiduciary duty a solemn duty?

20. Critical Questions: Context
• Who identified what it means to be a fiduciary?
• Who has set the stage and framed the debate?
• How is the debate staged and adjudicated?
• How do we speak of it?
• What metrics do we use to identify fiduciary
conduct?

21. Example #1: FI360 Practices
Practice 1.2.2. “All parties demonstrate an
awareness of their duties and responsibilities”.
VS.
All parties involved in retirement Trust
management will acknowledge the statutory
language of the Exclusive Benefit Rule and the
Prudent Man Rule over their signature.
The statement will disclose that the Prudent
Man Rule is widely acknowledged to represent
a Prudent Expert Standard of care.

22. Example #2: “Industry Standards”
No matter the exact definition you use,
Socially Responsible Investing (SRI) is a
small subset of the investable universe.

23. Example #2: “Industry Standards”
If socially responsible investing is a small
subset of a much bigger investment universe,
… what should we call the bigger part?
Is it the socially irresponsible part or the
socially unconscious part?

24. Example #2: “Industry Standards”
Why don’t we greet one another asking;
How is your socially unconscious portfolio doing?

25. Example #2: “Industry Standards”
• It is counter to the identity we have of ourselves.
• We want to avoid the feeling of knowing that others
think of us as socially unconscious or irresponsible.
After all, WE ARE GOOD PEOPLE HERE.
Perhaps, we have more in common with our Advisory
clients than we imagined.

26. Example #3: Let’s Make it Personal
Few investment advisors would stand in front of
their college age children and speak of building
their financial security (in part) on the strength
of buying the common stock of companies that
manufacture cluster bombs.

27. Example #3: Let’s Make it Personal
Most want to avoid feeling a loss of respect
and admiration from their children.

28. Example #2: Let’s Make it Personal
Try explaining why they invest in such
companies ANYWAY to a parent from Lebanon.
Cluster bombs (70% of which are made in the
USA) routinely maim Lebanese children.
… and you thought “Personal” meant you.
Perhaps, we have more in common with
Jim than we imagined.

29. Depending on what metric you use
to evaluate the authenticity of
fiduciary conduct your conclusion
regarding the appropriateness of
any activity may differ.

30. Prologue …
… like Jim, without the personal and
collective courage to examine our own
conduct, we will not come to know the
mistakes we are making.

31. Prologue …
Without a willingness to examine our
conduct for its consistency with the
values we proclaim, the
Purposefulness of serving in a
guardianship role will be subjugated.

32. The willingness to engage in a courageous
conversation is now required.
- Inspired by poet David Whyte

33. Thank You.
Denali Fiduciary Management
“Built by Fiduciaries for Fiduciaries™”
wmiller@denalifm.com
(206) 463 6700