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Selling Fiduciary: A Prototype for Independent RIAs

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According to Dan Moisand, managing partner at Moisand Fitzgerald Tamayo, the Florida fee-only financial planning and wealth management firm, more and more clients and prospects are asking about a ‘fiduciary duty.’ “And even better,” reports Moisand, those clients and prospects “understand what it means: financial advice in their best interest.”

While that’s very good news for independent RIA firms, they still face the challenge of explaining their fiduciary responsibilities in non-legalese that resonates with clients. As part of their strategy to meet this challenge, Winter Park, Florida-based MFT has become one of the first firms to sign on to the Institute for the Fiduciary Standard’s new Best Practices Affirmation Program, twelve practice standards for delivering bona fide fiduciary financial advice. 

“It’s pretty clear that things are not going to get less confusing for the public, and that the government doesn’t seem to be doing anything about it,” said Moisand. “The Best Practice Standards make it easy to demonstrate what our firm is all about. We’re just stating publicly that we do things we are already doing. It’s a good step in the direction of creating a true profession of financial advisors.”

To explain the best practices and his firm’s approach to taking care of its clients, Moisand created a video for the firm’s website described as “how we show our undivided loyalty to our clients.” The video’s title says it all: “The Key to Professionalism: Investors, the markets, and advisors need Best Practices to fulfill a fiduciary promise: A promise to defend, protect, and serve investors first.”

It’s the best example that I’ve seen for how to explain and ‘sell’ a fiduciary duty to one’s clients. Here’s a transcript of the video:

“One of consequence of all the recent [Presidential] campaign noise is a renewed interest in trustworthiness. This year, the Department of Labor finalized a new ‘conflicts of interest’ rule: That starting in April, requires people who give advice to retirement plan participants and IRA owners, to put the interests of those they advise first.

“Every credible study done on the matter shows that the public doesn’t know that most advisors can get away with not putting their client’s interests first. Sadly, this new rule has become politicized and its future is in doubt. But even if it stays on the books, it won’t apply to non-retirement accounts. So it’s only a partial step in a good direction.

“Long ago we decided not to wait for Washington to get its consumer protection act together. We’ve been operating exclusively as fiduciaries—legally obligated to place our clients’ interests first for well over a decade. We only work in a fiduciary capacity, and we never switch hats to become sales people. No one pays us but our clients—directly, and transparently. When we say we work for you, it isn’t a slogan, it’s a legal fact.

“So how do we show our undivided loyalty to our clients? One way is that we make commitments others won’t—and we put those commitments in writing, for all to see. And to further make a commitment to our undivided loyalty to our clients we are pleased to announce that we have become one of the first firms in the country to subscribe to the Institute for the Fiduciary Standard’s Best Practices Affirmation Program. The complete list and explanation of the twelve practices can be found on the blog page of our website: under the title ‘How We Show Our Undivided Loyalty to Our Clients.’

“But the first practice really sets the stage for the rest: It states that for us, the fiduciary standard governs all our professional advisory client relationships, at all times. The word ‘all’ is a key difference between how we serve our clients, and how the rest of the financial services industry conducts its business. It’s one more way that we provide a sanctuary from the noise.”

To my mind, Moisand’s video hits all the high points:

    1. Some advisors don’t have to put their clients’ best interests first.
    2. Washington doesn’t seem to be doing much to increase investor protections.
    3. We are fiduciary only: we don’t switch hats.’
    4. ‘We are paid directly—and only—by our clients.’
    5. We meet the highest fiduciary standards in the industry: The IFFS Best Practices Affirmation Program.
    6. In case any clients or prospects missed it, ‘the key differentiator between our firm and most others is that the fiduciary standard governs all our professional advisory client relationships, at all times.’

This video is a prototype for advisory firms to sell their fiduciary standard of client care.


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