Usually when you hear Stephen Covey give the keynote speech at a conference you are in a ballroom or auditorium with hundreds or even thousands of people. So it was a refreshing change to see him speak in an intimate setting in a room with about 45 people as he kicked off the Independent Fiduciary Symposium on Tuesday, May 25.
The setting, the Museum of American Finance on Wall Street, was an unusual, and yet poignant place for a discussion of fiduciary duty, hosted by Independent Fiduciary Matthew Hutcheson, with chief ethos officer of Strategic Ethos, Don Trone, and the Founders of the 401(k) analytics firm, BrightScope, Mike Alfred and Ryan Alfred.
In addition to a more than 200-year-old bond signed by Patrick Henry and what’s believed to be the oldest bank check in this country, dating from the 1700s, the museum is in the beautifully restored Bank of New York building. The museum’s exhibits are on the triumphs and scandals of capitalism in America; it’s like the Hall of Fame for the financial world.
Founded by John Herzog, former chairman and CEO of Herzog Heine Geduld, Inc., the museum is steps from Federal Hall where George Washington took the oath of office for president. The museum is across the street from the New York Stock Exchange, where the symposium group had been invited to pile in for the closing bell, and the group would gladly have gone, if not for some kind of “incident” involving the PIIGS (Portugal, Ireland, Italy Greece and Spain), and New York’s finest SWAT officers.
Well known for his bestselling book–”The 7 Habits of Highly Effective People” (Free Press, 1990), Covey discussed his newer book, “Speed of Trust” (Free Press, 2008). He asserts that trust is “an economic driver,” the “new currency of the global economy,” and a “learnable skill…a tangible asset which we can deliberately improve.”
Covey notes that people working with co-workers they trust have better communication: “open, unguarded, transparent, energizing, engaging,” and that things get done faster at companies with high trust. In addition, “differences,” he says, “become strengths.” These companies have happier and more productive workforces, and fewer rules. Indeed, he held up the employee handbook for Nordstrom, the retailer still renowned for great service to its clientele. It’s the size of a postcard–with only one rule: “Use good judgment in all instances.”
Conversely, companies with low trust have big employee handbooks, more rules, things take longer to complete and conversations with co-workers that are not trusted are “more guarded, calculated/calculating, labor intensive, miserable, draining and not transparent.”
When trust goes down at a company, Covey explains, speed goes down and cost goes up. “High trust organizations outperform low trust organizations by 280%,” according to Covey. Companies on the Forbes “100 Best Companies to Work For,” according to Covey, “outperform the market by 416%.”
Covey developed the “4 Cores of Credibility:” Under “Character,” he lists, “Integrity (honesty, courage and humility),” and “Intent (to act in the best interests of others).” Under “Confidence,” he lists “Capabilities (relevant, current learning and growing),” and “Results (performance and track record matter).”
Asked whether Goldman Sachs’ CEO Lloyd Blankfein could rebuild trust in his firm, Covey answered: “You can’t talk yourself out of a problem you behaved yourself into. You have to behave your way out.”
Covey notes that the fiduciary standard is a principles-based standard, while suitability is rules based. Covey said that perhaps Albert Camus framed the issue best when he stated, “Integrity has no need of rules.”
Comments? Please send them to [email protected]. Kate McBride is editor in chief of Wealth Manager and a member of The Committee for the Fiduciary Standard.