The ethical advisor: Putting clients first for success

Pool: I worked with IBM for 20 years, and with my specialization in state, federal and local governments, I kept running across all of these programs that were geared towards seniors, but so many of the services never got into the hands of the people they were designed for. I saw a niche I could fill, and I could be someone who could bring programs to seniors. I feel like my business is set up to answer any questions seniors have, or at least be a resource to get them the right information.

SMA: We hear a lot about suitability in this industry, but in your mind what is it that makes one an "ethical advisor?"

Pool: People are looking for a trusted advisor. Ethics is more than a word, it's a work in progress. If your clients' needs are not put first, you have missed your goal. Early in 2002, we happened upon a veteran who had dealt with three other advisors over the last five years. They'd each taken him to various paralegals to try to establish a living trust, but all they'd really done was sell him numerous different annuities from different companies. When I heard how he'd been treated, we took it upon ourselves to get this gentleman in touch with an attorney and we paid to have a trust done for him. We felt that he had been mistreated by people in our industry and the only way to make it right was to accomplish for him what others had been unwilling to do. Happily, several years later, he became a client.

SMA: What do you do in meetings with clients to put them at ease and to show them you're looking out for them and not your own pocketbook?

Pool: I tell them up front, from the first call, no decisions are to be made today. The only thing on the agenda is for us to get to know each other. And for me to learn what they really want and what their timetable is. The biggest question everyone has is, "Will my money last me?" But most people have not put those details on paper they have money, but they don't know where it's located. I just met with a client who had a pile of papers eight inches thick. Her family had a cattle farm and when they needed money, they'd sell a cow, and whatever was left over after paying their bills, they'd buy a CD. But they were all over the place and the banks would just keep renewing them, so she wasn't even keeping up with the cost of inflation. Over the last 22 years, we've helped her build more than she could ever know what to do with.

SMA: What kind of plan did you set in place for her?

Pool: I set up four different plans simply because I needed to determine what her goals were. She had lots of land, and she wanted to make sure this land was set up to stay in her family.

SMA: What advice would you give other advisors on how to conduct themselves in the right way and to do right by their clients?

Pool: Don't prejudge your prospects. And don't prejudge what your clients need. Keep the client involved at all times. One key is communication. We have meetings with our clients, many of them monthly, some annually, depending on their needs. They want them to feel secure, and if they don't get the chance to talk with someone, they don't feel secure. Someone needs to talk with them and let them know what's going on. From an ethical standpoint, most people in sales only have one or two items in their briefcase that's what they sell. But this is not a world of one-answer-fits-all, one-hat-fits-all. Everybody's needs are different. You need something that will fit each client.

Top 10 ways to soar … ethically

Want to fly high in financial services? Then jettison old thinking. First, success isn't about the money. It's about the value you deliver to clients. Second, it's not about enjoying the trappings of success. It's about making a real difference in the lives of people. Third, and most important, your business is not about YOU. It's about THEM (your clients).

Once you shift your attitudes, you're ready to revisit your business practices. Here's your preflight checklist.

1. Always protect and promote your client's best interests, even if it can mean making less money in the short term (but more in the long). I believe that 2010 will be the year of the fiduciary. The sooner you begin putting your clients' welfare first, the sooner you'll fly high with the best.
2. Honestly explain your education and business background, including licenses and designations. Flogging sham designations and claiming to write a book you had no hand in producing are like wing icing. . . dangerous to your longevity! If you really want to lift your business, earn a credible designation and write your own book instead.
3. Always disclose the important features of your products or services, including potential risks that may affect future performance or value. Full disclosure is the new normal for 2010 and beyond. You'll never go wrong overeducating clients about your methods and products.
4. Be totally up front about the realistic returns or future values a client can expect. Hyping results is not only an unethical business practice, it's illegal. Don't fly there!
5. Thoroughly probe a client's current and future needs in order to make suitable recommendations. Only low flying advisors recommend products they want to sell, not products their clients need to buy.
6. Respect client confidentiality even under third-party pressure to disclose information. Strong advisor/client relationships are based on trust. Breaking confidentiality is a heat-seeking missile that will blow up your relationships.
7. Only use advertising and presentation materials that are completely accurate and legally compliant. Flying with false insignias will put you on regulatory radar screens.
8. Always refer clients to an outside advisor for expertise that is beyond your training and current license. Flying on a wing and a prayer is a doomed fight. Better to bring on a more qualified co-pilot than crash your practice into a cliff.
9. Stay up to date on all industry practices, including emerging trends, new government regulations, and the latest product innovations. In today's turbulent world, taking wing without a current flight manual is like flying blind. There's a reason pilots are required to have great vision.
10. Finally, adopt the long view. Don't just try to fly high; fly long. If you make the right decisions that really help your clients, your flight time will be long, enjoyable, and profitable. And you'll quickly become known as a top-flight ethical advisor.

Harry J. Lew is communications and content director for the National Ethics Bureau.