Tag Archives: fiduciary

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Financial Advisors: How To Talk To Clients About Politics

The last time I put a presidential campaign sign in my front yard was 2004. We lived on a small court, and we had just moved in that September. One of our neighbors was another young couple, but the other two families had lived there since the houses were built in 1960.

My political convictions were (and are) important to me, but one day, as I pulled into the court and saw the sign, it struck me that while it may have been a bridge to one neighbor, it could almost certainly be a stumbling block for another. I hadn’t even met all my neighbors in person yet—did I really want my vote to be the first impression I made?

I pulled out the sign, and I haven’t raised another since.

Politics sign
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Sometimes I have to pinch myself, because as a financial advisor, my job is to meet people, learn about what’s most important to them, help them articulate those values as intentions and goals, and then help create and follow a plan designed to reach them. What a gig, and what a privilege!

One of the greatest gifts of my 20 years and counting in the business is the wide variety of people with whom I’ve been able to engage. While you might tend to think that there is a stereotypical financial advisory client, my experience has been anything but uniform. From teaching college students—one of the best educations I’ve ever received—to advising individuals and families, it’s the striking differences between people that have left an indelible mark on me.

Sure, aside from the college students, they all had something in common—they were blessed with means sufficient enough to hire someone to help in its stewardship—but that’s where the similarities stopped. And their political proclivities have ranged across a vast continuum.

Especially over the last decade, and increasingly over the past four years, I’ve also seen these political opinions manifest as convictions so gripping that I’d describe them as visceral. People seem increasingly concerned with the potential for politics to shape their lives externally, and these concerns are so deeply internalized that I can see, hear and feel the weight of them in the faces and voices of my clients.

These feelings seem just as strong across the political spectrum. It’s not uncommon for us, as advisors, to have a conversation with someone who is convinced that their livelihood is doomed and the very fate of our nation sealed if so-and-so wins only to find, in the very next conversation, that another person is convinced of something equally cataclysmic if such-and-such wins.

So what are we advisors supposed to do? How do we navigate these intense emotions with our clients? And how should we navigate the opinions we hold, knowing that our convictions are rarely, if ever, going to be entirely aligned with those of our clients?

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How To Avoid Being Victimized By Financial Deception

“I’m calling it — this is an Apple commercial,” said my 14-year-old son, about halfway into the visually stunning emotional appeal for educational experimentation that appeared on our TV while we were otherwise dedicating ourselves to one of the best college football games of the season.

Yes, it’s about that time again, when companies are rolling out new commercial campaigns in conjunction with some of the year’s most viewed sporting events–beginning with the college football playoff and culminating, of course, with the only spectator sporting event where no one wants to cede their seat during the commercials, the Super Bowl.

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“I think you’re right,” I said to my son (especially gripped because the commercial featured a young man sharing a defining moment with his beloved parents via his smartphone), just as the musical crescendo sent a chill down my spine.

But then came the verdict.

It wasn’t Apple, after all, even though the tech company is known for its artistic commercial flair in imploring viewers to engage technology in the most relational ways. It was a mainstay financial company inviting us to bring the benefit of our long-term financial planning for the future into the present.

Brilliant.

“Wait a minute, though,” I said to my boys, “These guys are notorious for hard-selling over-priced insurance policies for big commissions!”

“Whatever they are, it’s a great commercial,” my 12-year-old son concluded before the Oklahoma Sooners and the Georgia Bulldogs again filled the screen.

He was absolutely right. But as I reflected on the power of this particular message and medium, I’ve had this lingering sense that there’s a real danger present.

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The Three-Step Investor’s Guide To Navigating The Financial Advisory Fiduciary Issue

Originally in ForbesAs an educator in the arena of personal finance, I generally avoid matters of public policy or politics because they tend to devolve into dogma and division, all too often leaving wisdom and understanding behind. But occasionally, an issue arises of such importance that I feel an obligation to advocate on behalf of those who don’t have a voice. The issue of the day revolves around a single word: “fiduciary.”

At stake is a Department of Labor ruling set to take effect this coming April that would require any financial advisor, stock broker or insurance agent directing a client’s retirement account to act in the best interest of that client. In other words, the rule would require such advisors to act as a fiduciary. The incoming Trump administration has hit the pause button on that rule, a move that many feel is merely a precursor to the rule’s demise.

Why? Because a vocal constituency of the new administration has lobbied for it—hard. They stand to lose billions—with a “b”—so they’re protecting their profitable turf with every means necessary, even twisted logic.

The good news is that informed investors need not rely on any legislation to ensure they are receiving a fiduciary level of service. Follow these three steps to receive the level of service you deserve:

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The Ironic Conflict Of Interest Of The Fiduciary Financial Advisor

Originally in ForbesThe Trump administration’s move to delay implementation of the Department of Labor’s fiduciary rule has inspired me to delay implementation of my commitment to remain silent on matters of public policy and politics. It’s that important.

financial-aadvisorIt seems pretty obvious that those in the financial establishment who oppose the rule do so primarily out of self-interest. After all, it’s estimated that they will lose billions in profits if the final rule goes into effect. I get it.

But I was fascinated recently when a member of the media wondered aloud if my advocacy for a wider fiduciary standard was also simply an outgrowth of my own bias.

Indeed, who’s to say I’m not just grinding my own axe on this issue? Maybe I’m in favor of all financial advisors being held to a fiduciary standard because I’m a fiduciary financial advisor and part of a national community of financial advisors that supports the fiduciary standard.

That would be a convenient rebuttal from the anti-fiduciary community, but here’s the (huge) problem with that rationale:

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Why I’m Hoping The Trump Administration Doesn’t Kill The DOL Fiduciary Rule

Originally in ForbesAdvisors to President-elect Donald Trump have been vocal about rescinding the Department of Labor’s new fiduciary rule, introduced earlier this year to protect retirement savers from advice that isn’t fully in their best interests. The rule has already been under fire from the securities industry, and lack of presidential support could spell its ultimate demise.

As someone who has worked on both the fiduciary and non-fiduciary sides of the industry, I think revoking the rule is a bad, even dangerous, move. My rationale for such a position starts with my experience, early in my career, at one of the nation’s largest insurance companies.

“Look, you can set up your business any way you see fit after you’re successful. But right now? With a young family? You need to put yourself and your family first, and that means selling A-share mutual funds,” said my sales manager.

In other words, you must put your interests ahead of your clients’.

Fiduciaries are required to put their clients' interests ahead of their own.

Fiduciaries are required to put their clients’ interests ahead of their own.

As a brand new financial advisor, I was having a heart-to-heart with my supervisor after laying out my plan for creating a fee-based business within the agency, which would have meant recurring revenue for the firm but apparently in much smaller increments than were preferable.

“A-share mutual funds” are a variety with some of the largest up-front commissions—for both the salesperson and the company they represent. Variable annuities were even better, generating more of a “front-end load.” Whole life insurance was the pinnacle of up-front commissions.

In the newbie bullpen, we were encouraged to sell in various and sundry ways. The general agent in charge of the Baltimore metro area—the self-proclaimed “big dog”—was, indeed, a large man. A former starting lineman for a recognizable college football team, I’m quite sure that he routinely watched the classic Alec Baldwin “motivational speech” from Glengarry Glen Ross (turn the speakers down if you’re at work or children are nearby).

I recently discussed this topic on the Nightly Business Report (at the 9:05 mark)

My favorite anecdote from that time, though, was my general agent’s big fish story: “When you get a big fish on the hook, I want you to set a noon lunch meeting at the Oregon Grille.” (The Oregon Grille is an excellent restaurant north of Baltimore in pastoral horse country, where most of us had never dined.) “Go to the restaurant 30 minutes early and introduce yourself to the maître d’. Let him know that you’ll be returning shortly to the restaurant with a guest, and that you’d like to be referred to by name.”

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Finding A Financial Advisor App

This is the 15th exercise in a series designed to walk you through an entire financial plan.  The exercise is embedded in an Excel spreadsheet you can download and save for personal use.  You can read the backdrop for the exercise HERE, or just jump right in with the instructions given below:

Fiduciary Questionnaire

The compensation methodology and regulatory oversight of your financial advisor are not the only thing to consider when choosing an advisor, but they are a very important part of the picture.

You can also navigate directly to the following website to find a downloadable, printable questionnaire you can use to ask your advisor or a prospective advisor to complete for you.  At the end of the questionnaire is a Fiduciary Oath you should ask your current or prospective financial advisor to sign, showing their willingness to put your interests ahead of their own, or those of their company.

Navigate to the Fiduciary Questionnaire by clicking HERE.

And of course, you can also read more on the topic in the book Jim and I co-authored, The Ultimate Financial Plan, in Chapter 15, “The Gift of Discretion: Choosing a Financial Advisor.”