Upping the Ante

Every so often we have to make the decision to raise our level of play. As you know, a big part of why I left the brokerage firm environment a few years ago was to work solely in the best interest of my clients. I had grown weary of needing to constantly serve the corporate master and instead wanted to provide financial planning an investment management services without the conflicts of interest that are so pervasive within the industry.

For a while now there has been a slow but growing movement of advisors like me who have left the brokerage industry behind. This has mostly been driven by the public wanting more well-rounded financial advice, but also more information about who's providing the advice, how they're compensated, and the full cost of investing. In short, the public has been seeking better quality services that are more transparent. Not too much to ask in my opinion.

This change has also been driven by the ethics of advisors who, like me, developed an understanding of how the industry works and saw firsthand how unfavorably the cards are stacked against the public.

Over the last several years it seemed as if industry regulators were finally catching on. The Department of Labor, which regulates retirement plans and IRAs, had proposed what became known as the "fiduciary rule". The rule sought to level the playing field a bit by increasing transparency in the advisory industry and allowing customers to sue their brokers more readily, and even form a class action if needed. The rule wasn't perfect, but it was a good step in the right direction.

As you might have heard, the rule was partially thwarted by industry lobbyists and was delayed shortly after the new administration took office. Just last week, the delay was delayed again, now until mid-2019. Industry watchers speculate this latest delay could prove indefinite.

The industry at large is cheering this development because it means they can continue operating much as they have before, using opaque business and disclosure practices, and selling expensive investments that benefit firm before client. The simple fact is the investment advisory industry makes more money the longer they keep the public in the dark. Any delay or scuttling of broader regulations benefits them. And they don't want any part of the word "fiduciary", because they see it as a liability instead of an opportunity. This is shortsighted but entrenched interests are, by definition, hard to move.

As a registered investment advisory firm principal and fee-only advisor, I already serve you in a fiduciary capacity, with no if's, ands, or other qualifiers. But as I grow my firm over time I want to double down on this obligation to you. Since being a fiduciary is all about process, I want to put policies and procedures in place that continually ensure the advice and services I'm providing meet the highest ethical standards.

To that end, this morning I'm sitting in a training seminar to become an Accredited Investment Fiduciary in addition to my Certified Financial Planner designation. This isn't an investment seminar where I learn to identify hot stocks. Instead, I'll be learning more about prudent asset allocation, investment screening for fiduciaries, pertinent laws, regulations, and lots of other fun stuff. As you can imagine, my industry is constantly changing so lots of continuing education is required.

So, what does all this mean for you? Over time these prudent practices should help generate additional investment return by keeping costs low and investment quality high, but the other benefit is piece of mind.

The regulators and others in Washington are trying to keep the investment advisory world a dark and scary place. I am moving in the opposite direction by bringing more transparency and simplicity to how I serve you. With a little luck and lots of hard work I'll be able to do so for a very long time to come.

Have questions? Ask me. I can help.