The backers of a new set of fiduciary best practices for advisors are calling for input from industry practitioners as they shape the final guidelines, which they envision could eventually function as a type of industry certification.

Developed under the aegis of the Institute for the Fiduciary Standard, the best practices are intended to serve as an educational tool to help consumers distinguish from advisors who are obligated to act in their clients' best interests, and those who might be providing conflicted advice in pursuit of a commission or some other type of compensation.

"In recent times the meaning of fiduciary has become transformed," Knut Rostad, president of the institute, told reporters on a conference call. "Investor misconceptions persist about what differentiates product sellers from advice givers and what these services cost."

The institute unveiled the 11 principles in January, seeking to codify various criteria of fiduciary advice, such as documenting the basis for investment recommendations and routinely providing clients with a statement explaining all fees and expenses.

See our story on the January announcement here.

The institute is collecting comments on the proposal through March 9 in what supporters hope will be a collaborative process to develop principles that help consumers understand which advisors are true fiduciaries while still being workable in practice.

"The devil is in the details, and we're looking to finalize the best practices by asking and collaborating with advisors who are attempting to practice these principles regardless of their business model," says Mary Malgoire, founder of the Family Firm, a fee-only advisory practice in Bethesda, Md.

"We urge you to comment, to provide your feedback on these specific 11 best practices," says Malgoire, a member of the board at the Institute for the Fiduciary Standard. "The final version will be shaped by advisors."

The institute has formed a panel of fiduciary experts who will review the comments and help formulate the final version, which is slated to be released in June or July. Eventually, Rostad's group envisions some type of review board that could evaluate advisors and confer a fiduciary certification that would become a mark of differentiation for consumers.

"I think we all know that it's been the Wild West under the suitability standard for investors," Malgoire says. "They can't know who will act in their best interest and who may not."

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