I didn't receive any questions this month to use as a source for this column. Maybe you were all too busy trying to figure out whether the Department of Labor's fiduciary rule is alive or dead? Or you could be trying to figure out how the American Health Care Act will affect you and your clients?
At any rate, without a suitable question (
Hint! Hint!) I was left to my own devices and decided to spend some time clearing my inbox to look for inspiration. That's when I found a picture my son sent me of two European ice hockey players. My son, who played hockey as a kid, wanted to show me the uniforms these junior level players were wearing to compete for their home countries.
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The uniforms were emblazoned with so many logos it was hard to find the players' numbers. Bigger contributions bought larger and more prominent displays. Running out of space can be accommodated with multiple jerseys — home, away, first period, second period and so on. If you follow NASCAR, you're used to seeing cars covered with sponsor logos as well as the drivers' flight suits, and the trend is spreading to other sports. The Boston Celtics recently announced that their iconic uniforms will feature a sponsor logo next season.
At this point you may be thinking, "So what, Dan? What does this have to do with ethics?"
It started me thinking about disclosure, compensation and conflicts of interest in financial services. It can be difficult for consumers to understand who is actually paying their financial adviser. It can be hard for advisers to explain without putting our clients to sleep. Our compensation structures are opaque and convoluted. Millions of pages of ADVs are published with lengthy, generalized explanations designed to meet regulatory requirements but add little to the customer's understanding — notwithstanding the fact that few customers bother to read them.
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Wouldn't it be easier if financial advisers had to wear the logos of all the companies whose products and services they distribute? Sure, the broker-dealer would get prime positioning with the largest and most visible display. Mutual fund families might get the right sleeve and insurance companies the left. Cuff links may be small but would be prized for the frequency of sighting as an adviser hands over a pen for customer signatures. Neckties and scarves in vibrant sponsor colors and designs let the customer know right away which vendors the adviser favors and which, by their absence, she doesn't.
It would only take a minute for customers to see immediately the scope and scale of sponsor support. Think of it as an infographic the adviser wears so all of those visual learners can get the picture right away about compensation and conflicts. Prospective customers have short attention spans. They don't want to get into details, and they hardly ever read past the first paragraph. They have no idea what a fiduciary standard is even when maybe acting in their best interest might be good for them. Wouldn't it be just be so much easier if all they needed to do was check out the logo on their adviser's socks?
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Dan Candura is founder of the education and consulting firm Candura Group. Write to him to submit a question. All submissions will be treated confidentially.
