One of the strategies that many financial planners use to differentiate themselves is to communicate that they are fiduciaries: legally bound to put their clients' interests before their own. In fact, as the debate about the fiduciary vs suitability standards has increased in recent years, more and more advisors who are subject to fiduciary regulation are promoting it as a differentiator in the marketplace. Yet in reality, most people generally assume that anyone they're doing business with will treat them fairly - at least until proven otherwise. Which means that claiming you're a fiduciary isn't necessarily a differentiator - unless you actually go so far as to bash your competition and accuse them, implicitly or explicitly, of being liars and cheaters. Could this be part of why the fiduciary message doesn't really connect in the marketplace? Because it's turning into a giant negative advertising campaign where you bash the competition instead focusing on the value you actually deliver?
Friday, July 15. 2011
Why "Fiduciary" Might Actually Be A Terrible Marketing Strategy!
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Is Social Media An Effective Tool To Grow A Planning Practice?
Most planners struggle to grow their businesses and bring in as many clients as they wish. With the surge of social media in recent years, from Facebook to Twitter to LinkedIn, an increasing number of consultants have hailed social media as the great ma
Most planners struggle to grow their businesses and bring in as many clients as they wish. With the surge of social media in recent years, from Facebook to Twitter to LinkedIn, an increasing number of consultants have hailed social media as the great ma
Weblog: kitces.com | Nerd's Eye View
Tracked: Jan 02, 09:18
Tracked: Jan 02, 09:18
The Public Deserves A Choice, But It's Not Fiduciary Vs Suitability
In the ongoing debate for the fiduciary standard, supporters of fiduciary have suggested that everyone in financial services should be subject to the standard, while those opposing have responded that consumers deserve a choice between fiduciary and suita
In the ongoing debate for the fiduciary standard, supporters of fiduciary have suggested that everyone in financial services should be subject to the standard, while those opposing have responded that consumers deserve a choice between fiduciary and suita
Weblog: kitces.com | Nerd's Eye View
Tracked: Jan 04, 08:21
Tracked: Jan 04, 08:21
Why Celebrating The Decline of Wall Street Firms Makes Us Look Bad
As Wall Street firms continue to struggle, beset from all sides by a waning public image, financial uncertainties, numerous regulatory battles that could drastically change their business model, and an ongoing defection of brokers and clients, the indepen
As Wall Street firms continue to struggle, beset from all sides by a waning public image, financial uncertainties, numerous regulatory battles that could drastically change their business model, and an ongoing defection of brokers and clients, the indepen
Weblog: kitces.com | Nerd's Eye View
Tracked: Mar 29, 09:33
Tracked: Mar 29, 09:33
Fees And Fiduciary: Good Business, Bad Marketing
As the financial planning profession continues its inexorable march towards a fiduciary client-centric standard of care that minimizes or outright avoids conflicts of interest, those most passionate about carrying the torch have often been the most vocal
As the financial planning profession continues its inexorable march towards a fiduciary client-centric standard of care that minimizes or outright avoids conflicts of interest, those most passionate about carrying the torch have often been the most vocal
Weblog: kitces.com | Nerd's Eye View
Tracked: Jun 14, 07:34
Tracked: Jun 14, 07:34
If they have an existing advisor, the first question is always why are you exploring new options?
I typically take the time to ensure that they fully understand their current investments. If they have a good advisor, this will give them a warm fuzzy. If they end up learning things about their investments they didn't know, I have just taken the first step in establishing my credibility. And I don't have to say a negative word.
http://www.linkedin.com/groups?gid=4617058&trk=myg_ugrp_ovr
Great post! I agree completely...a good extension to your May posts re: NAPFA's new push "The Power of Trust" and on whether clients really even care (per se) if we're fiduciaries.
Those posts got me rethinking how I communicate my difference to prospects/clients. I used to list Fiduciary as one of four differentiators but scrapped that a couple of months ago for several of the reasons you've mentioned.
From the client's/prospect's view, the stated emphasis on Fiduciary seems a little like "methinks the lady doth protest too much."
While it's appropriate that we advisors wrestle amongst ourselves and regulators over the Fiduciary issue, perhaps it gets unnecessarily dragged into how we communicate with clients/prospects.
I would suggest that the vast majority of individual advisors are good people who have their client's best interests at heart. The major difference between a fiduciary and someone who is not is not the advisor, its the structure that surrounds the advisor. A fiduciary role requires that you examine the conflicts that are inherent in the structures you are part of. Some advisors who are not in fiduciary roles may be absolutely confident that the advice they are providing is in the client's best interest. However, the reason they are able to be so confident is because the structures they are part of limit the universe of potential solutions to a given problem and they receive more and better training on how to use the proprietary, and often higher cost/comp products to solve problems.
When a client understands that distinction, then its not taken as a personal attack on the other advisor.
For my own practice, it also helps the client understand why the process has to be intrusive at the beginning. Plenty of people want a stock tip, or a good product and they believe that's how they'll "test" you. If a prospective client is simply looking to buy a product from me, I won't take the client, because I'm not sure that I can do them justice without going through the full planning process first. I'd rather have fewer clients that all have the same eye-opening experience (and become advocates for the process) than a lot of clients that all have a product or two with me. I'm sure I'm not alone in this assesment. Explaining the fiduciary role to a client up front prepares them for the process.
For example, maybe it can be a talking point without being the main difference between yourself and the competition. We address it to bring to the prospect's mind that different 'advisors' get paid differently, and that it's important to know how they get paid, and to what extent they can be held accountable for the advice they give. some get paid to put together a plan, some get paid to manage money, some get paid to sell products, and some do a combination.
The point is to evaluate whether or not they are receiving financial counsel or making a purchase. We also make the disclaimer that just because someone doesn't have a fiduciary license, doesn't mean they aren't acting in your best interest.
You are spot on. Even more, from a marketing perspective, if we are successful in getting the fiduciary standard applied to everyone, it will, by definition, not be a differentiator. I wrote about why marketing the standard will never work as well on one of my blogs. http://bit.ly/oAtlGg
Great post, as always!