Tired of the Fiduciary Debate? Consider Adopting This One-Page Oath

You operate under an insurance or securities license. You believe in operating your business ethically and in compliance with all applicable laws and regulations. And while you may not fully agree with the impending application of a fiduciary standard for advisors who sell or service retirement plans, you just want the whole debate to be over with . . . now!

If that sounds like you and you like the idea of holding yourself out as an ethical advisor regardless of where the industry heads with the fiduciary standard, here’s a potential solution. Adopt the one-page pledge developed by Harold Evensky and promoted by the group he co-founded in 2009, The Committee for the Fiduciary Standard.

According to Evensky, the pledge includes what he says are the main features of the fiduciary standard: serving the client’s best interests first, acting prudently, not misleading clients, and avoiding conflicts of interest or, if unavoidable, managing them in the client’s favor.

Committing to this pledge has five key advantages, says the National Ethics Association.

  • First, it allows advisors and their staffs to define an ethical bright line outside of which no one in the firm will stray.
  • Second, it serves as key branding resource that shows prospects and clients what advisors truly stand for.
  • Third, it allows advisors to exert some control over their business, assuming Congress and regulators will be unable to devise a totally unified and effective standard of care for all financial-services professionals.
  • Fourth, its content is simple and non-controversial. It’s a “mom-and-pop oath that no one should find objectionable,” Evensky told Financial Advisor magazine.
  • Fifth, it will help advisors and staff to avoid ethical missteps that often lead to client complaints and costly errors-and-omissions insurance claims.

So what exactly does the One-Page Fiduciary Oath say? Embracing brevity, it simply states:

“I believe in placing your best interests first. Therefore, I am proud to commit to the following five fiduciary principles:

“I will always put your best interests first.

“I will act with prudence; that is, with the skill, care, diligence, and good judgment of a professional.

“I will not mislead you, and I will provide conspicuous, full and fair disclosure of all important facts.

“I will avoid conflicts of interest.

“I will fully disclose and fairly manage, in your favor, any unavoidable conflicts.”

The pledge ends with spaces for the Advisor’s signature, firm affiliation, and date.

Interested in taking the One-Page Fiduciary Oath? Go here.

For information on affordable errors and omissions insurance for low-risk insurance, investment, and real estate professionals, visit EOforLess.com. For information on ethical sales practices, please visit the National Ethics Association’s Ethics Center.

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Don’t Let Your Sales Die Online: Nine Essential Strategies

Have you ever received a positive response to your proposed solution (and the company that offers it) only to have your prospect insist on checking out your recommendation on the Internet? What do you do?

If you think that sighing in frustration is your only choice, think again. The better solution: anticipate early on that prospects will go online, and  neutralize their “findings” in advance.

The key is to avoid getting into arguments with them or pressuring them to decide now before Internet complaints cloud their judgment. Instead, establish your expertise so that your authority trumps comments from anonymous Internet posters. Here are nine ways to do just that:

  1. Get better at seeking out prospects who fit your desired customer profile. By focusing your efforts on the types of people with whom you work best, you will greatly minimize the chance of them getting distracted by comments from disgruntled Internet posters.
  2. Become more transparent. When you go beyond the standard disclosures and really let your hair down about who you are, what you bring to the table, and why you’re trustworthy, you’ll vastly enhance your ability to debunk erroneous online information.
  3. Work harder at establishing your authority. If you do a lot of writing, then share a compilation of your articles. If you collect client testimonials (assuming your license allows it), then add to your current assortment and upgrade the format in which you share them with prospects. If you publish a blog, share its URL. The goal? To make sure the prospect understands you know your stuff and have done a great job for clients in the past.
  4. Invest more time in fact-finding. Try harder to really understand the prospect’s situation, personality, and main presenting need and then secure agreement to solve that need. Avoid rushing to close a sale after one meeting.
  5. Work on your due diligence skills. In other words, do your research so you never recommend a company or product with lurking skeletons.
  6. Fully justify your recommendation. Explain why you think the recommended product is suitable for their needs and why the insurer or investment company is an appropriate provider.
  7. Neutralize the Internet objection. At the end of the meeting, say something like: “If you’re like most people, I know you’ll want to check out what I’ve recommended on the Internet. That’s fine, but what I’d say is this: large financial institutions have millions of customers. Take Costco. Having a handful of complaints online doesn’t represent the quality it delivers to the vast majority of its customers. It only suggests that people with complaints about Costco are more highly motivated to take their issues online than those who are happy. Does that make sense?”
  8. Play up your personal knowledge of an insurance company. Tell people about the three ways to evaluate an insurer: through financial ratings, through their dealings with their agents, and from how they treat an agent’s clients. In this case, assure the person that, from your perspective, all three “data points” are excellent.
  9. Commend prospects for doing their due diligence. Don’t pooh-pooh them for wanting to validate your recommendation on the Internet. Instead, praise them for being an informed customer. But always set the stage for the next meeting so you can discuss their “findings”—and get the case on the books!

For more information on affordable errors and omissions insurance for low-risk insurance agents, investment advisors, and real estate broker/owners, please visit EOforLess.com. For information on ethical sales practices, please visit the National Ethics Association’s Ethics Center.

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