An all-star panel of industry personalities gathered at the FPA annual conference on Sunday for a frank discussion of how new fiduciary standards might impact the advisor industry and day-to-day business.
The roundtable discussion consisted of the following individuals:
George Tamer, TD Ameritrade Institutional
George Kinder, Kinder Institute for Life Planning
H. Jude Boudreaux, CFP
Geoff Davey, FinaMetrica
Don Trone, Strategic Ethos
Ed Jacobson, Ed Jacobson and Associates
Carl Richards, Prasada Capital Management
Julie Littlechild, Advisor Impact
Roger Wellington, Kinder Institute for Life Planning
Gary Klaben, Protinus
The following is a truncated transcription of the conversation. A full transcript will be posted upon completion. Moderator Marie Swift of Impact Communications began by asking how advisors can define and communicate their value to clients in order to rebuild trust in the post-downturn economy.
Geoff Davey: The rise of the fiduciary will be important in addressing this issue. A fiduciary standard is mandated in some places. Those advisors that adhere to a fiduciary standard will be a point of difference for the consumer moving forward, but only if the fiduciary standard is enforced.
Julie Littlechild: On average, client trust has probably been eroded. However, we did a study of advisors and found that among the group we spoke with, it was not really a factor. So it was interesting to get an idea of the different ranges to which trust had been eroded, from “a lot” to “not much at all” Advisors need to address trust issues before they become a problem.
George Tamer: We put together a letter that explained the difference between a Madoff-type of advisor and the type of advisors we do business with. We reassured them that what happened with Madoff absolutely could not happen at TD Ameritrade.
George Kinder: I’ve spent a lot of time in England recently. They are about to impose fee-only advice as the only business model across the board. What we need to do is think of our practices 10 or 15 years in the future and take those steps now. What will it look like? There will be a fiduciary standard, there will be CFPs and you will have to have a well-articulated life planning process for your clients.
Ed Jacobson: You also have to go from the global policy setting to the personal or transactional process. For our type of advisors, we have always been fiduciaries, so we don’t have to apologize. It’s not as if those things George [Kinder] talked about for the future isn’t already implemented.
Don Trone: Think of Stephen Covey’s five areas of mistrust. They are mistrust of self, relationships, organizations, markets and society. There is little we can do about a mistrust of self and society. We can, however, deal with a mistrust of relationships, organizations and markets. We have to know where this trust comes from before we can effectively deal with it as professionals.
Julie Littlechild: These are big concepts. The question becomes about applying them everyday in our practices to address trust.
George Kinder: People say, “I trust my advisor, but not al the others.” That means the level of trust is actually very low. Life planning restores that trust. The client becomes aware of the fact that we do indeed care. Lie planning begins with the client coming to the advisor with a problem. The second phase is what we call “lighting the torch.” It’s the excitement they feel that comes with the realization they can live the life they’ve envisioned. It restores their self-confidence. If everyone had a life planner, we would restore the other two areas of mistrust, society and self.
Ed Jacobson: That entails the planner saying, “We will be with you.” We can’t guarantee that the life plan will be achieved, but we can guarantee that we will be with you every step of the way.
Jude Boudreaux: Trust at the advisor level is ruined by the little things. Do what you say you’re going to do. Return phone calls. If you can’t get to them right away, call the client and let them know that it is on your list and you’ll get to them ASAP.