Do advisors that too often tout the fact that they are a fiduciary which requires them to act in the best interests of their clients actually create doubt and hurt themselves?
I once had a partner who was fond of saying that he was the most honest person in the world. Of course, my partner, like most people who wear their honesty on their sleeves, was anything but trustworthy.
According to advisor Kimberly Foss:
Telling prospects that I am bound to serve their best interests can give a skeptical person a chance to think of the inverse. A potential client might think, “Maybe the law requires her to act in my best interests because she may not be naturally motivated to do so.” A prospect might wonder if I operate under an extra layer of regulation because of some previous wrongdoing that I committed.
If prospects hear me talk too much about how I have a fiduciary duty and how it serves them well, my efforts could produce a negative result. By insisting that I am trustworthy, might those claims sow seeds of doubt, allowing my audience to wonder if the opposite could be true?
The entire discussion about the DOL’s fiduciary rule may be leaving DC plan sponsors and participants wondering who they can really trust. If the government and press is paying so much attention to the issue, maybe something really bad is happening painting the entire industry with the same brush.
As Don Trone is fond of saying, fiduciary responsibility is rules based, not ethics or morals based. An employer can create a really bad DC plan but still follow the law, just as an advisor can be a fiduciary and not really act in their client’s best interest, which should start with serving as a leader and steward.
Simon Sinek tells us to focus on why we do something, not what we do. Perhaps advisors who focus on their ability to serve as a fiduciary should lead with why they are in the business and how they help clients and, in order to best serve them, they are required under law to act as a fiduciary.
Starting with the fiduciary discussion or emphasizing it too much can lead to unwanted results, causing people to wonder if they can be really trust you just as people found out about “the most honest person in the world.”
