Marketing yourself as a fiduciary

The fiduciary standard is all about serving the best interests of investors. Even so, it can also serve the interests of investment advisers by being a part of an effective marketing strategy.

There are three compelling reasons why advisers who are fiduciaries should embed what it means to be a fiduciary in their marketing plans.

• The most important factor in an adviser’s relationship with an investor isn’t performance or price of services; it is trust.

• The majority of advisers who are fiduciaries do market their fiduciary status and benefit from it.

• Professional marketing experts recommend focusing on the trust factor above all else.

What doesn’t work from a marketing perspective is stating simply that one is a fiduciary. Too few people understand why being a fiduciary matters, or what the word even means.

Rather, anytime the word “fiduciary” is used, it should be tied to descriptive phrases of the fiduciary practices that are hallmarks of the adviser’s business and why these attributes matter for clients. Marketing strategies should concentrate on the attributes that speak most directly to being trustworthy and competent.

Based upon reports from practitioners, as well as available literature on this subject, there are five particularly effective marketing opportunities for fiduciaries.

WORKING WITH ERISA PLANS

Certain markets are more tuned in to the importance of working with a fiduciary than others. Working with plans established under the Employee Retirement Income Security Act of 1974, particularly larger plans, is the best example. Every plan has a responsible plan fiduciary who has every reason to work with someone to whom they can delegate certain fiduciary obligations and can help them navigate the duties they retain. The Labor Department’s 408(b)(2) rule, to take effect in January, mandates that service providers to plans address their fiduciary status. Foundations and endowments will be attuned to the fiduciary story.

The fiduciary standard is a process standard, which means that most fiduciary advisers use state-of-the-art investment tools and techniques that can be showcased to clients and prospects. Stress comprehensive and reliable investment or financial planning management processes as a confidence-building antidote to the unsettling influence of volatile economic and market conditions. Key fiduciary services such as assistance in preparing investment policy statements, formulating asset allocation strategies, conducting investment due diligence, and providing comprehensive reporting and monitoring services can be especially effective differentiators. Additionally, help in maintaining a fiduciary file for ERISA and philanthropic clients can be a huge selling point, as it helps these clients demonstrate conformity to their own fiduciary obligations.

Cultivate referral arrangements with other professionals, such as attorneys, accountants and fellow advisers who specialize in areas that are outside your area of expertise.

In the future, simply being a fiduciary will become less of a differentiator. Referrals from leading professionals in related fields can amplify the trust factors. Think about how important referrals are when you seek the services of skilled professionals such as doctors, lawyers, veterinarians, etc.

Differentiation on the trust factor also can be achieved by building and touting a stellar professional résumé. Fiduciaries are held to a “prudent expert” standard, which means that they are expected to act with the skill, diligence and good judgment of a professional. They can establish themselves as experts based upon their education, professional designations, experience, recognition as authors and commentators, leadership posts in professional organizations, or by becoming known as specialists for particular client types.

For the time being, while there are still advisers who will not acknowledge fiduciary status (or are prevented from doing so by their firm), there is the opportunity to provide a signed fiduciary pledge that simply states your commitment to serve the client’s best interests. Unsigned copies of the pledge should also be offered to clients and prospects with the suggestion that they should work only with those who are prepared to make a fiduciary commitment.

Although being a fiduciary and making that fact known to the world will not prompt prospective clients to beat a path to your door, fiduciary status invites marketing opportunities that can be quite powerful. Good things happen when investors’ and advisers’ interests are aligned.

Blaine F. Aikin is chief executive of Fidicuary360 LLC.

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