I like all of the talk regarding fiduciaries.

Especially in light of the number of senior citizens who are in deep trouble right now.

How does one explain a fiduciary to a retiree?

Think about it.  The DJIA should be somewhere between 22,000 to 26,000 if we use 8% returns from either the high or low in 2007.

So, that means everyone is WAY below their retirement target.  REALLY way below.

That means we would need a level of unprecedented market returns to get back to "whole".  That is not going to happen.

Are any fiduciaries telling retirees that?  Or are they simply collecting fees?

As a fiduciary, what is your primary mission?

According to Wikipedia, a fiduciary:

In a fiduciary relationship, one person, in a position of vulnerability, justifiably vests confidence, good faith, reliance, and trust in another whose aid, advice or protection is sought in some matter.; [2] In such a relation good conscience requires the fiduciary to act at all times for the sole benefit and interest of the one who trusts.

Let's go back to the retiree.  

They expected 8% per annum in equities.  That's gone.

Let's look at the yield curve: Ten Year Treasuries at 2.26%.  Not good.

So there is no other mathematical outcome that works for the fiduciary to explain, other than to terminate themselves.

Think about that for a second.

Under ANY asset allocation scenario using "prudent man" measures, the fiduciary is GUARANTEEING that the retiree cannot make their goal.

All of the old "100 minus your age" formulas get tossed in the garbage.

The TRUE fiduciary would tell their client that they have to take more risk.  BUT that violates every tenet of a fiduciary.

Imagine telling a senior citizen that they need to take more equity risk?

Ironically, and mathematically, that is what has to happen.  But a true fiduciary cannot do that.

So, a true fiduciary is in a lose/lose.

One last point. In light of the return numbers reflected above...what does that make a robo-advisor?

*I am personally curious who can reply to this in a manner that their compliance departments will allow*