Two of my favorite sayings are: “A good reputation is of greater worth than gold,” and “If you always tell the truth then you never have to remember what you’ve said.” Even though the first adage was first coined when the price of gold was much lower, I believe it is as true today as ever.
Years ago I read a book by Ken Blanchard entitled, “Raving Fans.” As the title implies, Blanchard argues that an advisor’s goal should be to get your current clients excited about what your services so they will tell others. A few years later I listened as Roy Diliberto postulated that the best marketing strategy was his existing clientele. With this in mind, it is imperative to adhere to the above adages at all times. At the center of this is the belief that revenue is a byproduct of high-quality service and advice. In other words, you will never go wrong if you are honest, competent, and fair.
Why do some advisors stretch the truth? Why do some abuse their clients’ trust? Maybe it’s greed. Maybe they feel the need to bend the rules to increase production so their company will view them as a top producer. Whatever the reason, there is absolutely no excuse for anyone acting in an unethical fashion. When one individual acts in an unethical manner, it causes harm to an entire industry.
Obviously, unethical behavior is not restricted to the financial services community. It is human nature. It’s in the public sector as well as the private sector. In fact, it’s everywhere people are found. Moreover, unethical behavior may be exaggerated in industries which hold the potential for a high standard of living.
While we cannot root out all of the “bad apples,” we must hold ourselves to the highest standard. I challenge anyone to disagree with this! Even though this is so evident, why hasn’t everyone embraced the fiduciary standard of care? Why does the brokerage community at large resist this? Not that this would eliminate all unethical acts, but raising the bar might just help.
My prediction? I do not believe we will see a fiduciary standard applied to all advisors in the financial services industry. Why not? It would cost brokerage firms too much to police. And since they have a rather large lobbying contingency, this issue will likely be discussed for many years to come. Who are the real losers in this? The clients. The winners? Why, RIAs of course!
Have a great week!