The Mission-Driven Advisor: Are You a Fiduciary 100% of the time?

Written by: Jeff Thomas

Are you a fiduciary 100% of the time?”

 

How do you answer that question when clients or prospects ask it?

It was a question I used to dread as an advisor at the wirehouse. 

 

 

If you work anywhere but an RIA-only firm (a registered investment advisor firm that does not represent any party other than the client), the simple answer to that question is “No”. You’re in good company, however.  Most of the industry has to answer “No” to that question.

 

But that is changing—quickly.  You’d have to be dead to be in the wealth management industry and not feel the wind blowing toward a fiduciary standard.  While the government negotiates with the Wall Street lobbyists over how exactly to legislate fiduciary standards and disclosures, the horse is already out of the barn—the public is on to the fact that just because a person’s business card says “Financial Advisor”, doesn’t mean the person carrying the card represents them 100% of the time.

 

The reality is that while I didn’t feel conflicted at the wirehouse—my intent was to do the right thing for clients each day--the platform was conflicted before I showed up in the morning.  The truth is that I might have worn four different “legal” hats representing four different parties during one conversation with a client or prospect:

 

When talking about mortgages, I was representing the bank (not the client) using my banking license.  When I sold a life insurance policy, I represented the insurance company (not the client). When I sold a C share mutual fund, I represented the brokerage firm (not the client).  Oh yeah, and I had a license to represent the client and sell investments on fiduciary basis.  The problem was, the clients had no clue that I could potentially change legal hats four times during one conversation.

 

The way I used to answer the question of being a fiduciary was to ramble on about all the different tools I had to help them solve their problems and trying to explain my legal position.  It only took about 30 seconds for peoples’ eyes to glaze over.  They knew the real answer was “No”. 

 

All the public wants is a simple “Yes” or “No” answer to that question.  They don’t want to burn brain cells understanding when you are working as a fiduciary or not.   They just want to know you fully represent their interests only, all of the time.

 

This is what they are used to in other industries.  When they go to their doctor, lawyer or CPA, they know these people are bound to help them without conflicts.  Why shouldn’t this be true of the financial advisor community? Would you put your life in the hands of an attorney that was also representing the other side of the table?

 

As a “Mission-Driven Advisor”, I got tired of not being able to answer the question of whether I was a fiduciary as a simple “Yes!”.  I wanted my legal status to match my heart to serve clients.  So, I made the move to an RIA-only platform.  Not only does it solidify that I provide complete representation to my clients,  I also believe it gives me a huge advantage in the marketplace.  The public is becoming more and more attune conflicts in the wealth management industry and is demanding their advisors represent them 100% of the time. 

 

So, how do you answer the question “Are you a fiduciary 100% of the time?”.

 

Or perhaps more importantly, are you 100% comfortable with your answer?

 

read more:

WHY THE EXODUS FROM THE WIREHOUSE?

WHY should united capital's sale to goldman sachs matter to you?

 

 

Jeff Thomas is the Founder/CEO of Archetype Wealth Partners. He has assembled an amazing team to provide an open architecture, fee-only (fiduciary) platform that offers a wide variety of investment choice to clients. Archetype exists to help families thrive across generations.

 

Disclaimer: Our intent in providing this material is purely for informational purposes, as of the date hereof, and may be subject to change without notice. This article does not intend to constitute accounting, legal, tax, or other professional advice. Visitors and readers should not act upon the content or information found here without first seeking appropriate advice from a trusted accountant, financial planner, lawyer or other professional.

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