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Financial Planning > Charitable Giving

A drive to be ethical

By Daniel Williams

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There’s a rumor going around that one of Todd Cousino’s clients looked at him during a consultation and saw right through him. That’s probably a tall tale (OK, it’s definitely a tall tale) but not exactly outside the realm of possibility.

You see Cousino, below, was doing the transparency thing before it was cool, before the mainstream media put a bulls-eye on the backs of financial advisors.

Cousino, of Riverview, Mich.-based Cousino Financial, LLC, tells me the story behind his idea of being an ethical advisor. He began his career, as many of you do, in a captive company. The company, he says, steered him in a direction of what he should sell whether or not it was in the best interest of the consumer.

“I would go home and be miserable about it. I couldn’t hold my head up.” That sick feeling stuck with him and over time he worked out a plan. “My barometer is simple. If I wouldn’t do it for myself, I’m not going to do it for my client.”

For Cousino it boils down to how he feels at the end of the day. And, at the end of the day, he wants “to be able to go home, to hold my head up and look my kids in the eye.”

Before the financial crash in 2008, Cousino was already ahead of the game, devising a plan for transparency that he could live with and that his clients could benefit from. While talking over the phone, he quotes Gandhi to me as an inspiration on how he wanted to build his practice: “Be the change that you wish to see in the world.” – Mahatma Gandhi

See: The transparent advisor

Once he found an initial foundation to how he wanted to conduct business with clients, everything else sort of took off from there. At that time, he says, “we decided to really put transparency into the practice.”

With every consultation and with every contract, Cousino does something that leaves other advisors shaking their heads: “We show (the client) what our compensation will be.”

The Full Monty

Wait, what? Quoting Gandhi is one thing, but giving the Full Monty of disclosures, I mean, c’mon…

“We tell the client upfront what our compensation will be. We tell them what we will be paid,” Cousino says. He tells me that some of his colleagues in the business are pretty blunt in their assessment of his full disclosure. They say, “Are you crazy!”

In addition to showing the compensation on the product or service at hand, clients also get an annual revenue report that shows what the firm was paid, and where it came from in relation to the client. If there are fees, the client sees it. If it’s commission, they see it. This revenue report, Cousino says, goes back five years.

I ask the obvious question: “Has a client ever lost it when he sees what you’ve been compensated over, say, a five-year period?”

“I have not once had a client raise eyebrows and go ‘wow!’ ” says Cousino. “What’s prevented that is because I said upfront what I was going to be compensated. They’d already seen that number.”

At this point in the conversation, Cousino tells me about his transparency epiphany. It came about in 2008 as he and his wife were shopping for a Chrysler Town and Country. Being a financial professional, Cousino had negotiated all along the way with the sales guy.

He’d gone over everything, hadn’t left a stone unturned. So, the sales guy brought all the paperwork over. The last page had to do with rebates. The only problem was, the last page was blank.

The car salesman had held out the $1,000 rebate that the Cousino family was set to receive. Todd caught the con game. How many other customers, consumers not as savvy as a financial professional, had left a thousand large on the table?

“At that point,” Cousino says, “I realized that I didn’t want to be viewed like I viewed that guy. I only have 75 clients because I spend so much time with each one of them and I can’t afford to not disclose something that might pop up down the road.”

I have a final question before we hang up the phone: “What happened with the car?”

“I did buy the car,” Cousino says, “but only after getting the $1,000 rebate and negotiating a lifetime warranty.”

For more from Daniel Williams, see:

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