Should Fiduciaries Be Cost Conscious?

Like trust officers, writes Jason Zweig in Who Will Guard Your Nest Egg? investment advisers are expected to act out of "fiduciary duty" and put their clients' interests ahead of their own.

Always? Within asset classes, much of the variation in returns seems to relate to expenses:

Let's say you tell your broker that you want to simplify your stock portfolio into an index fund. He then tells you that his firm manages an S&P-500 Index fund that is "suitable' for you. He is under no obligation to tell you that the annual expenses that his firm charges on the fund are 10 times higher than an essentially identical fund from Vanguard. An adviser acting under fiduciary duty would have to disclose the conflict of interest and tell you that cheaper alternatives are available.

Where could this line of thought lead? Are trustees of 401k plans breaching their fiduciary duty if they allow a high-cost insurance or brokerage firm to handle the participants' investments?

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Be sure to appreciate the Heath Hinegardner illustration, reproduced below, that accompanies Zweig's column. For more of Hinegardner's conceptual illustrations, see his admirable web gallery, TrustHeath.