Prepare yourself; it’s going to get tougher to do the right thing, with the right people, at the right time. Here are some steps you can take to improve fiduciary outcomes this year.
1. Learn how to lead in a VUCA world, for during a crisis your clients aren’t looking for a fiduciary. If you’re not familiar with the term, VUCA is the acronym for Volatility, Uncertainty, Complexity and Ambiguity. It’s commonly used in the military and business communities to describe an environment that’s experiencing constant and unpredictable change, an environment that becomes increasingly less responsive to traditional management and planning approaches.
2. Be more circumspect in your dealings. Pay-to-play is more rampant than ever. Not only do the schemes continue to impact what products and services are offered in the marketplace, but also what speakers and topics are covered at conferences, and what news is and isn’t printed in the financial press. For the right price, everyone seems willing to turn a blind eye.
3. Teach your lay fiduciary clients how to use a universal decision-making framework. Lay fiduciaries is a term used by the Center for Board Certified Fiduciaries to identify the 17.5 million men and women who oversee the assets of pension plans, foundations, endowments and personal trusts. For more than four decades our industry has tried, and failed, to teach lay fiduciaries the arcane and legalistic language associated with fiduciary responsibility and portfolio management. We now know there’s a better approach — teach clients how to use a universal decision-making process. Consider a plain English framework that can be used every day by clients — to lead a team, department, division, board and the investment committee.
4. Question authority. Regulators continue to publish complex fiduciary rules and regulations even though there is little evidence their rulemaking has improved decision-making outcomes or increased the public’s trust in our industry. Regulators also will continue to try to make every broker and adviser subject to a fiduciary standard even though there's growing academic and scientific research to suggest not everyone has the neurological or psychological capacity to serve in such a role. Yes, you need to comply, but don’t make the mistake of using regulations to define who you are or how you’re going to serve your clients.
5. Stop using checklists as a prothesis for authentic discernment. Checklists only serve a useful purpose when they support a more thoughtful exploration of facts and circumstances. Don’t fall into a checklist mentality — putting a checkmark in a box without fully investigating the appropriateness or completeness of a particular process.
6. Think and act like a leader and steward. Research has shown that most leadership training is ineffective when it’s not tied to a person’s day-to-day decision-making process. There’s a parallel to fiduciary training; it won’t be effective unless it’s tied to a person’s concept of leadership and stewardship. Your clients "get" the concept of leadership and stewardship; they don’t "get" the concept of fiduciary.
7. Go back to school. A common characteristic of exemplary fiduciaries is that they’re lifelong learners. If you’re focused on one fiduciary channel —say, wealth management — consider broadening your area of expertise to include retirement consulting. If you’re concerned about the use of insurance products, take a course on the associated fiduciary process and best practices. If you’re a retirement consultant, consider training on how to advise clients on ways to meet the new fiduciary requirements associated with the Consolidated Appropriations Act. If you’ve taken a course on behavioral finance, consider widening your aperture to also take in behavioral governance. And if you’re concerned about succession planning, consider NIL (next-in-line) training for your rising leadership stars.
[More: How neuroscience is illuminating the relationship between leadership and fiduciary responsibility]
Don Trone is CEO of the new Center for Board Certified Fiduciaries, which is affiliated with the Wake Forest University School of Professional Studies.
Chicago-based Mesirow Fiduciary Solutions adds flexPATH's plan-level outsourced fiduciary book, boosting its retirement market reach to $164 billion.
Also, Raymond James's employee advisor channel adds breakaways from Wells Fargo and Stifel, while UBS welcomes an ex-Morgan Stanley duo in Indiana.
It promised guaranteed principal and 10% monthly returns. The SEC says it invested nothing.
Ten years after entering the fee-based annuity market, MassMutual Ascend says nearly half its lifetime sales came in the past two years alone – but barriers remain among fee-only advisors.
Amplify, WealthReach, Zeplyn and Zocks have unveiled partnerships aimed at automating portfolio management, content creation, account opening, and client communication.
Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
