Unlocking Real Value Blog

“Fiduciary” From the Client’s Point of View

The issue of which advisors will ultimately be held to fiduciary standards  is bound to continue into the foreseeable future. Clients, however, are more concerned with how you – their advisor – is looking after their particular interests now.

How do you demonstrate to your clients that all of your actions are in their best interest? A good place to start is by looking at the message of  The Committee for the Fiduciary Standard. These principles, or some variation of them, should be part of your Mission Statement, Value Proposition and the stated principles which govern how you operate your business. First – talk the talk – it will help differentiate you from the competition.

Then you must walk the walk – your actions must follow your words. Here is a little quiz. Is it ethical to say to a client “I charge a fee of 1% of the value of your investment portfolio, a fee much lower than many of my competitors”? This statement is misleading because it fails to mention the costs that are associated with the actual investments – the client’s  total cost. In fact, it is likely that the total cost the client pays will be the same as, or close to, what the competition charges in an “apples to apples” comparison. This example demonstrates actions which are contrary to the principle of fully disclosing all information to the client. Your actions affect your clients much more than any proposed legislation!

Demonstrate your value-added to your clients and always follow-through on your commitments. Then all of this talk about who is and who is not a fiduciary is less likely to distract and sidetrack you (and your clients).

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