The Golden Rule & the new ERISA Fiduciary Standard

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By David P. Schaeffer

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Let me begin with what I believe to be a standard to run any business. The golden rule, as memory serves, “Do unto others as you would have them do unto you.” I don’t think that goes far enough when an advisor is tasked with managing someone’s
retirement nest egg.

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Our fiduciary standard has five tenets that cannot be broken:

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1. To always act in the best interest of the client even if we are not compensated.

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2. To always place the client’s needs above our own.

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3. To always seek the highest quality solutions.

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4. To never settle for the common answers.

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5. To share all research with our clients.

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Our standard exceeds the Securities and Ex- change Commission (SEC), Financial Industry Regulatory
Authority (FINRA), Department of Labor (DOL), and the Certified Financial Planner Board’s (CFP)
definitions. Our standard is much more diligent.

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Under their (SEC, FINRA, DOL and CFP) fiduciary rules, you must act in the best interest of the client. But in practice, it is not a violation to sell a product that is not the best in class. In other words, if I worked for a company that sold its own brand of variable annuities (I don’t, but if I did) and I thought that product was appropriate for your portfolio, it would be considered “ok” to sell you that product. What if there were 150 similar products in the market, many with lower fees and more attractive benefits? Under the old and newest standards, it is still permissible. How is that acting in the clients’ best interest?

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We will serve our community whether we are compensated or not. In many cases, we meet with people that
just need a hand in understanding their V.A. benefits, Social Security benefits, or employee or retiree health benefits. We don’t charge folks to answer questions.

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Since the firm was founded, I have mandated that our clients get the most appropriate solution available, whether we could offer it or not. Let’s say you really need a CD from a bank. We no longer offer banking products. Wouldn’t it make sense to get the highest rate available on your FDIC-insured savings? We do the research and direct you to the firm offering the solution. Remember the movie “Miracle on 34th street”? I didn’t make this stuff up, it’s just the right thing to do.

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Common wisdom is usually based in truth, but must be altered for the time in which we live. The old 60% stock and 40% bond portfolio of great companies was the common wisdom for a dividend income plan in the 50s through the 90s. Then 2001 and 2007 hit. Gone are the old solutions, because today they no longer provide the answer people need. We adjusted before any of our clients suffered a loss; many profited in the downturns.

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Have you ever wondered how your current and past advisors selected the financial products for your portfolio? Did they have a basket of pre-screened offerings? Pre- assembled portfolios? Were they limited to just a few choices in an effort to sell more and bolster a firm’s volume bonus? We have always shared our research, product selection process, and the monies we earn with our clients. We are 100% transparent. Ask us the hard questions, we answer!

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Bottom line, we do what we say, when we say, and share how. Just ask our
wonderful clients!