From the July 2007 issue of Wealth Manager Web • Subscribe!

Your Word/Your Bond

How many people do you know who would play poker with you? For money? Over the telephone? And let you deal the cards? Imagine how great it would be if you had a reputation for being so trustworthy that people would play you under these conditions. You'd be set in business. And yet, in the financial world, where you can make millions of dollars honestly, some people risk censure, fines, their reputations and prison terms in order to make even more money. We have all heard, "You can't take it with you." Well, that's not exactly true. What you get to take with you is what you leave behind--your reputation.

And if you don't think reputation is that important, answer these questions: Would you put your clients' money into a company run by Ivan Boesky or Michael Milken? How would you feel if your son came home one day and said: "Mom, dad, I'd like you to meet my fianc?e, Monica Lewinsky"?

The expression on your face right now just proved my point.

The underlying principle of Gresham's Law (bad money drives good money out of circulation) applies to ethics as well: Bad ethical practices drive out good ethical practices. It's the "everybody's doing it" syndrome. When you see so many people cutting corners and profiting from it while you follow the straight and narrow path and seem to be falling behind, I readily admit that it's sometimes tempting to cross over to the dark side.

But this is where your mother's good advice applies: "If everybody else was jumping off that roof, would you jump off, too?"

We are fiduciaries. Clients place their trust and confidence in us. As fiduciaries, we are obligated to manage our clients' assets for their benefit, rather than for our own profit. When we do a good job, we are paid very handsomely.

Doing a good job should also be the basis for your confidence in the future. The true values that guide our business have withstood the test of time. If you continue to honor these values, your confidence in your future is well-founded.

The wealth management business is relationship-based. We all seek continuity and growth in those relationships. Give your customers reason to increasingly depend on you by your total devotion to ethical business practices, and I can guarantee that you will prosper.

Your future rests on your integrity. Everything that you do--good deeds and bad--will follow you for your entire life and beyond, just as your shadow follows your body. And, like your shadow, your reputation often precedes you.

In order to make certain that we are on the same page, two very short definitions are needed.

Ethics--a system of moral principles based on ideas of right and wrong; recognized rules of conduct relating to values.

Character--the aggregate of features and traits that form the individual nature of a person; reputation; moral or ethical qualities such as honesty, reliability and integrity.

The bottom line: Yourtrue character is revealed by what you do when no one is watching.

In our business, it starts with your mission statement, your promise to your prospects and customers. What is your promise? Is it believable? Each of us can recall at least one outlandish promise we have heard or seen; some high-tech, computerized, black box, extravagant claim of super returns with no risk, free trades, free money; a never-lose computerized trading system. Of course, if a deal sounds too good to be true. . . .

Why not start with a simple, honest and believable promise? For example: "My goal is to help my clients achieve their financial goals the same way they would do it for themselves if they had my expertise, my experience and the time to do it. I am committed to delivering the highest quality personal financial service that any client has ever experienced." In short: I promise to work hard for you. That's why you pay me.

Personal integrity builds trust. Either your word is good, or it's not. You must keep your promises, and conversely, don't make promises you can't keep. This is as important when agreeing on a meeting time as it is on making a financial recommendation. How did you feel the last time someone was 20 minutes late for a business meeting with you? If you were my client and were 20 minutes late, I would certainly be more forgiving than if you were a vendor. But I still wouldn't like it.

Once clients know that they can count on you, they will. And they will count on you for more and more things, over and over again. Customers and clients have much more confidence in a person or a business when they can rely on the representations made.

An excellent example occurred when Warren Buffett bought the McLane subsidiary from Wal-Mart. Buffett writes: "To make the McLane deal, I had a single two-hour meeting with Wal-Mart's CFO, and then we shook hands. Twenty-nine days later, Wal-Mart had its money. We did no 'due diligence.' We knew everything would be exactly as Wal-Mart said it would be--and it was."

When I see stories on TV about how our industry is stealing from the public, I want to put my foot through the screen. Obviously, only a very, very small percentage is cutting corners or being unethical. The vast majority of us are bright, hard working and doing the right thing. We find out what the client is trying to accomplish financially, and then we come up with a plan to help them achieve their goals.

Sometimes situations arise in which there are conflicting interests. For example, something might be good for us but bad for the client or vice versa. Self-interest demands that we obey the law and adhere to strict ethical rules, because the consequences of failing to do so could be very costly in terms of our reputation and/or legal problems.

Personal integrity is more than honesty. Being honest is when your words represent reality. Integrity is when your actions are true to your words; when you "walk your talk." The financial advisors who will thrive in today's highly competitive marketplace are those who place the client's welfare above everything else.

Gary Wollin ( is a Warren Buffet-style investment advisor with 45-plus years of Wall Street experience. Regularly featured in The Wall Street Journal, New York Times and other publications, he writes and speaks on sales, customer loyalty and the stock market.

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