Fiduciary Links: Is marketing the fiduciary standard an effective strategy?

A study released last week from ByAllAccounts suggested that a large segment of advisors are missing an opportunity by not marketing their fiduciary status or practices. The idea of marketing your fiduciary distinction, especially now when there is no uniform standard, has been a popular subject recently, with Bob Clark and Mercer Bullard both writing on the subject in the past week alone. However, it isn't a strategy that everyone agrees with. One author declared last week that marketing fiduciary just doesn't work. His premise being that investors don't understand the fiduciary standard and care more about customer service, returns and their personal relationships with their advisors, regardless of business model. He's not alone in this thinking, as the comments sections in any of the above articles reveals (it is also worth noting that the author himself concedes in the comment section to his article that marketing fiduciary may be suited for retirement plan advisors).

So, the question is, does marketing fiduciary actually work? We could point to more than a few of our own members who have incorporated ours and other fiduciary-focused materials into their marketing and have achieved great success. On the other hand, correlation doesn't necessarily mean causation, and the author is correct that the great fiduciary debate revolves largely around the issue of investor confusion about who is actually working in their best interests.

That being said, it would seem to come at little risk to, at the very least, mention your fiduciary status and make your distinction part of your marketing. In fact, even if understanding the fiduciary concept never reaches a saturation point with investors, the current reform debate has to have at least elevated public awareness to some degree and there could be risk of losing out to on some potential clients who expect their advisor to act as a fiduciary. Think of it as an SEO keyword, you are not going to turn up in those searches if you don't use the word at all.

We'd be interested in hearing any success stories of marketing fiduciary from advisors in the field to share with our readers and membership. Or, for that matter, reasons why you've decided it isn't worth it to highlight your fiduciary status.  If you have a good story, leave it in the comments or let us know via email to blog@fi360.com.

Now on to the rest of the best links from the past week:

In the news:

• House Financial Services Committee Republicans send letter urging SEC to halt fiduciary rulemaking [InvestmentNews]
• FINRA moving ahead with front-office registration plans [InvestmentNews]
• Associate General Counsel of the SEC says that fiduciary standard will only get tougher via rulemaking [AdvisorOne]
• Bob Clark continues to read the tea leaves, which all point to FINRA as the SRO for advisers [AdvisorOne]

From the blogs:

• Behavioral traits that affect financial decision making [The Investment Fiduciary]
• Want to know if your advisor is a fiduciary? Ask them. [Fiduciary News]
• Trending topics for plan sponsors from last week [Fiduciary News]
• Ron Rhoades on due diligence for fixed income annuities [RIABiz]
• Don Davidson interviews Fiduciary Benchmarks' Tom Kmak for his 401k Podcast [Advisors Access]

From the organizations/associations/government/academia:

• Commissioner Troy Paredes stresses importance of careful cost-benefit analysis in fiduciary rulemaking [SEC]
• Republican-led subcommittee challenges ideas of SEC self-funding and of a uniform fiduciary standard in hearing last week [House Financial Services Committee]
• A Senate hearing last week addressed securities lending practices and how they are little understood by retirement plans [Senate Special Committee on Aging]
• Study: Advisors missing opportunity to market fiduciary compliance (also available: a webinar recording featuring fi360's Blaine Aikin on the fiduciary standard) [ByAllAccounts]
• FSS releases study about fiduciary practices to be discussed at fi360 Conference in May. We encourage you to visit and complete the survey [Financial Service Standards]
• In the last bulletin from the Reish & Reicher law firm, Fred Reish and Bruce Ashton ponder whether 401(k) account balances should be presented as monthly income figures [Reish & Reicher]
• Upcoming webinar on knowing your fiduciary responsibilities includes prohibited transactions [DOL]
• The approach to asset allocation for U.S. non-profits [Towers Watson]
• A proposal for front-office registration requirements [FINRA]

Articles your clients are reading (or should be): 

• Can't hit them all, so I'll just say send your clients to this blog. Last week's posts included not trying to predict the next natural disaster in your investment decision-making, rebalancing advice, evaluating mutual funds and more [U.S. News & World Report's Smarter Investor]
• Is your 401(k) riskier than you think? If you are using a TDF, it could be. [U.S. News & World Report]
• Variable annuity fees you don't know you're paying [The Investment Fiduciary]

Have a link we missed? Leave them in the comments section or email us at blog@fi360.com. For more of the best links during the week, make sure you follow us on Twitter.

Comments

[Investment Fiduciary]

Most investors are indeed not very aware of fiduciary standard. That actually presents a great education opportunity. That why I keep writing articles like "variable annuity fees you don't know ..." and "the staggering cost of conflict of interest."

Those who get it will never go back to a salesman for financial advice again.

[Stephen Wershing, CFP]

Thanks for the thoughtful contribution to this discussion - I think it is an important one! I wrote the post you referenced on why marketing the standard won't work.
I wanted to agree with you about the value of mentioning it. While I do not believe it will be a "hook" any time soon, keeping the word in public will help gradually get it into the client vernacular and promote the debate. And, while I do not seeing it being the most important marketing point to be made, it can help on the margins.
Advisors have a real struggle with differentiation (http://bit.ly/dRmkY0). It is a real challenge to identify the big things that separate you from other advisors. Once you do that, you can add to it with other attributes that are important but not differentiators. Like independence. Now that over half of financial advisors are independent, it doesn't work as a primary differntiator any longer. But it can be handy to mention for those times when you are competing with the Merrill guy down the street. I see the fiduciary standard the same way.
And, if we are persistent in our fight for the standard, we can someday get to the point where being a fiduciary is seen as necessary by a prospective client, like great customer service and objective advice.