the world needs a new financial system

we are building it

  1. discovering superfiduciaries as stewards of perpetual capital
  2. setting them free from the tyranny of the trading tape
  3. empowering them to pursue exemplary superfiduciary stewardship of prosperous adaptations to life’s constant changes through negotiated agreement with enterprise, investing in enterprise cash flows, directly, to generate exemplary superfiduciary cash flows, indefinitely

Creators of Fiduciary Finance

The evergreen core is Tim MacDonald and Cody Thornton.

Tim is a Double Eagle, in law and philosophy, from Boston College, with an additional degree in tax law from Boston University. Over a 30 year career as a deal lawyer, investment designer and builder of amazing financial cash flow models, Tim has seen from the inside how the financial system in its current form actually works, and why it isn’t working the way we need, want and expect that it should.

He is leading evergreen in adaptively evolving a new form of finance for a new form of financier to build the financial system the world needs now.

A system that includes Fiduciary Finance and Adaptively Evolving Capitalism.

Cody is a uniter of design, law, and finance, concentrating on large-scale intervention and investment. He came late to law after accepting that the best real-world physical and financial planning, even with ample capital, fails without project-by-project visions adding up to greater change through good dealmaking and appropriate regulation.

Cody may be the only person to hold professional degrees in law, design, and business, with multiple honors, from Northeastern, Harvard, and Questrom. In law school, he was Editor-in-Chief of the school’s flagship law review and was elected commencement speaker by his peers.

Cody has 15+ years of experience throughout the world, from landlocked Kazakhstan in Central Asia to water-logged St Helena in the South Atlantic. In addition to his thriving Boston-based legal practice, Cody has also played an instrumental role in building one of New England’s most renowned design firms.

Tim MacDonald

Tim’s story

I started my legal career in 1980, just as the party was really getting started.

Over the following 30+ years, I lived and worked through the collapse of the Savings & Loan Industry, the collapse of Long Term Capital Management, the Collapse of the bubble and the euphemistically named Global Financial Crisis of 2008, that almost brought about the collapse of civilization as we know it, together with a long litany of less spectacular financial system failures.

Now, I am living and working through a rapidly accelerating erosion of Defined Benefit pension plans and their surreptitious replacement with Defined Contribution savings accounts, leading towards a collapse of our retirement provision: a proper pension plan – a Defined Benefit plan – provides money to live on for as long as we live; a retirement savings plan – a Defined Contribution plan – only provides money to live on until the savings run out…then, what are we going to do?

It is hard not to live and work through all this collapse and erosion, without developing a nagging feeling that something has gone wrong.  Many others share this belief, and choose to cast blame and find fault, echoing many variations on a common theme of “we have too many bad actors acting too badly, and these bad actors need to be made to stop acting so badly”.

Having worked inside the financial industry, and seen the way this industry actually works, and why it is not working the way we need, want and expect that it should, I find this “moral failings” theory of change unsatisfying.  Instead of casting blame, I think we have to find a better way.

My search for that better way begins with a diagnosis of the present way. In conducting that diagnosis, all roads lead to Wall Street, and the pension industry.

For decades, Wall St. had been trying to convince pensions to put the vast aggregations of other people’s money entrusted to their good judgement into the stock market. For decades, they had been stymied by the law of fiduciary duty, that prevents fiduciaries, like pension funds, from speculating with the other people’s money entrusted to their good judgement. Trading in stocks and bonds is the very definition of speculation. Look it up. It’s in the dictionary.

In 1972, Wall St found a solution to this vexing problem of fiduciary prudence. It is called the Uniform Management of Institutional Funds Act. It declares, overruling centuries of common law and common sense, that trading in securities is not speculation if it is done through a portfolio of properly diversified trading positions constructed on the principles of Modern Portfolio Theory, which asserts that individual share price volatility always reverts to a trend line of constant growth, over time and on average. It is the law of statistics applied to stock prices.

The Uniform Act is something called a Model Law. It was written and published by a self-organized committee of lawyers called the National Commission on Uniform State Laws. It is not a law making body. It’s members are not elected representatives of the people. It is supposed to be a specialized task force assigned to study idionsyncracies in the laws of different states that make it unnecessarily difficult for people to conduct business in different states. No state is required to enact any Model Law. Each state is free to consider and decide on its own.

By 1973, 43 states had enacted the Uniform Management of Institutional Funds Act. Amazing.

It took a little while to get things going, but by the 1980s vast sums of pension money were pouring into the stock market, changing the way those markets work.

What have we learned?

  1. Pensions and other superfiduciaries putting their superfunds into the economy as equity into enterprise is good for the economy, for society and for society’s superfund set asides.
  2. Doing it through securities trading is not.

Cody Thornton

Cody’s story

Unlike Tim, I started my legal career later in life, well into the new millennium, just as the world was sobering to the realities of fictitious boundless growth and limited planetary resources.

I have always been interested in international economic development and systems thinking, but found from years of experience that most policymakers fail to appreciate the true physicality of economics generally. Often the focus on macro policy, with the hope that maybe the right incentives will drive the right actors to do the right thing at the right time, ignores the need to effect change project by project on the ground.

My decision to infuse my development work with legal knowledge and tools was a direct response to my inability to see how I could genuinely help real people make change happen here and now, even if it starts slowly.

I see financial planning as inherently infused with physical resource rallying and legal deal making, which is why I am brought in on large-scale public-private projects to weave the design, capital, and risk sharing into one cohesive vision. This expertise plays perfectly well with an evergreen mentality about how to effect change worldwide.

Tim and I met at an academic conference where I was trying to convince law professors that they were teaching designers and not just legal practitioners and therefore should teach a bit more like designers do. This encouragement is applicable across the professions. I think that pension funds have to view themselves as portfolio designers as well, focusing particularly on meeting their cash flow needs by ensuring that they can physically meet the needs of their beneficiaries both now and in the future.