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SearchSeeking input: Do we need an oath?16
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calesmith    |  0 |
| Hi guys, Here is a question that has been in the back of my head for a while: Do we need a spoke fund oath? More specifically, should we have some sort of agreed-upon means of self certifying that as a spoke fund manager you have the majority of your net worth in your fund? I don't think anyone needs or wants to be in the business of policing how much of their net worth new spoke fund guys have in their funds, but I do think an oath or something similar might serve two purposes. The first would be to underscore the difference in a spoke fund from the investors' perspective as compared to the alternatives. The second would be to deflect one of the potentially valid criticisms mentioned in a earlier post on the boards here...namely, it would be an easy way for an investor to distinguish between an unfunded model and a true spoke fund. I think about this as potentially being something similar to what NAPFA does for its fee-only planners. Their oath looks like this: FIDUCIARY OATH National Association of Personal Financial Advisers (www.napfa.org) The adviser shall exercise his/her best efforts to act in good faith and in the best interests of the client. The adviser shall provide written disclosure to the client prior to the engagement of the adviser, and thereafter throughout the term of the engagement, of any conflicts of interest, which will or reasonably may compromise the impartiality or independence of the adviser. The adviser, or any party in which the adviser has a financial interest, does not receive any compensation or other remuneration that is contingent on any client's purchase or sale of a financial product. The adviser does not receive a fee or other compensation from another party based on the referral of a client or the client's business. What the Fiduciary Oath means: * I shall always act in good faith and with candor. * I shall be proactive in my disclosure of any conflicts of interest that may impact a client. * I shall not accept any referral fees or compensation that is contingent upon the purchase or sale of a financial product. So, conceivably, we could come up with something similar for spoke funds that once agreed to we could each post on our sites (if desired) for potential investors to check out. NAPFA charges for joining up, and by extension being able to reproduce the oath on your website, but that's not something I have any desire to do. Again, I think self-certifying is the way to go here...it's voluntary, it avoids silly rules, and it meets the key criteria. That said, I suppose it could also make sense to get some sort of logo/badge designed that could be posted along with the oath, too, no? Or does that start to sound like too much central planning? And does the oath idea in general make any sense? Also - would it be too strident to insist on "majority of net worth?" For instance, some guys have asked if "a significant portion" of their liquid net worth is enough to qualify as a spoke fund. What do you think we should do about that distinction - if anything? I concede it's late and I'm a bit loopy, but figured I'd throw that out there for whatever it's worth... Please let me know what you think - good, bad and indifferent, eh? Cale |
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Post 1 • IP
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AAOI | 0 |
| I like the idea. Maybe the net worth requirement could be altered to liquid net worth (i.e., it doesn't include assets like your home or funds/savings earmarked to sustain and grow the business)? Just my 02 cents but I figured I would chime in here. | ||
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kevino | 0 |
| This is the key point that pops in my mind when I think "spoke fund", and I think an oath would help to reinforce its importance as well as help to communicate to others about the concept. One sticking point is that some of us do now and some of us may some day run more than one fund. It seems easy enough to account for that in the oath, but do we allow space for a fund that is targeted at a certain audience that may not include us? We definitely don't want to get law-oriented, and I'm not suggesting that this would ever evolve into a movement where we have 2x leveraged short funds of environmentally-friendly companies based in the Bahamas. However, by way of example, if I were Cale I'd probably have a lot more of my assets in the Tarpon Folio than the Gecko Folio at this point in my life. Any thoughts on that? Is this a non-issue? Regardless, I do think we should be eating our own cooking in all funds, even if it's a relatively small helping in cases where the fund is not directly suited to our needs. To go to Ryan's point, I would think we'd want to shoot for "investable assets" as our theoretical denominator. |
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slkiel | 0 |
| Agree with all of the comments. To Kevin's point, I've been using the word "significant" rather than "majority" of my net worth because I have the majority of my net worth in The Freedom Fund, and a significant portion in The Hayek Fund. I also think the spoke fund logo for this site would make a great badge for our websites and marketing material. I'll have to think about the idea of an oath more, although on first glance I like it. Let me throw this out: Certainly we're a club, should new spoke fund people have to, for example, be voted into the club by existing members? For example, they can apply, and the existing members can discuss and approve. It doesn't seem like a big problem now, but looking out five years it may be. Also, in terms of policing. This is the official spoke funds website and will probably always list spoke funds that are recognized by us. If someone just starts using the spoke fund name, I don't think we're in a position to force them to remove it, but we are in a position to enforce the use of the spoke fund logo. And, certainly, they wouldn't be included in the website as "official" spoke funds. That would be a relatively easy and cost-free way of enforcing the brand. |
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calesmith | 0 |
| Great input. Thanks, guys. Will come up with some more thoughts here and bounce 'em off ya. Thx again. Cale |
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