Once upon a time, it was possible to get a mortgage with a handshake. My father was a banker. This was how he did business. Sure, there were a few signatures required (very few forms by the way) but the foundation of the contract between lender and borrower was built on honesty.

When I traveled to London as part of my undergraduate studies in finance, I visited the headquarters of one of the world’s oldest insurance companies, Lloyds of London. What impressed me most was how the company distilled the complexity of its global billion-dollar enterprise into a clear statement: "A man’s word is his bond."

NOW IT SEEMS like we learn about a new "Bernie Madoff" almost every day. Have we lost our way? Is there anybody we can trust? Is financial honesty extinct?

Actually, trust and honesty remain very much alive and well. In the financial world, individuals and firms still operate and thrive by meeting the needs of their clients. They do this by embracing the standard of a fiduciary. What does it mean to serve as a fiduciary? A person or entity serving in this capacity is guided by the following principles:

_ Put the client’s best interests first

_ Act with prudence – that is, with the skill, care, diligence and good judgment of a professional.

_ Do not mislead clients. Provide conspicuous, full and fair disclosure of all-important facts.

_ Avoid conflicts of interests. Fully disclose and fairly manage, in the client’s favor, unavoidable or unforeseen conflicts.

These principles encompass more than words. They go directly to the heart of the matter. This is the soul of financial honesty. Regulations serve as a guardrail. There always will be those who choose to ignore the rules at their peril or who seek to push the envelope to extremes to see what they can get away with at the expense of others.

A FIDUCIARY does not rely on regulations to do what is right. A fiduciary does what is right simply because it is right. Integrity is not something you turn on and off. As

M. H. McKee so clearly said, "Integrity is one of several paths. It distinguishes itself from the others because it is the right path and the only one upon which you will never get lost."

In our next column, I’ll share some thoughts on how you can seek and find those who support financial honesty.

James D. Hallett, Hallett & Associates, P.S., is registered as an investment adviser with the SEC and only transacts business in states where it is properly registered or excluded from registration requirements.

This column is for informational purposes only and should not be used as the primary basis for an investment decision. Consult an advisor for your personal situation.