When Mindset Drives Action

“Whether bound by the fiduciary standard or not, most advisors see themselves as fiduciaries to their clients. As such, the onus is on you to be certain that you are in the best place to serve those clients.”

Last month, I posted this commentary to LinkedIn and it created a whirlwind of response. Many in agreement, and a few who questioned my use of the word “fiduciary” to describe those who don’t work in the RIA space. In my view, fiduciary responsibility is a way of being – a philosophy, if you will – driving most quality advisors.

In my work as a consultant, I have found that whether an advisor is held to a fiduciary standard or a suitability standard as mandated by the regulatory environment and his firm’s directives, there is one point that remains common: putting clients’ best interests first is typically top of mind with respect to any and all decisions made.

While a wirehouse advisor, for example, is governed by the suitability standard, personal financial gain and self interest are almost always secondary to “doing the right thing” for those he serves. Are there exceptions to this sweeping generality? Of course. But I do believe they are outliers.

One opposing viewpoint came from a LinkedIn commenter who said, “The problem here is a mechanical one. If your license is held with a FINRA regulated firm, either as a ‘Corporate RIA’ or as an FA, you are on a ‘Captive’ platform…You can only sell the products and services that are ‘approved’ by your firm. You are prohibited from ‘selling away’. You can pick from the best your B/D has to offer but unfortunately, this is rarely the best of what is available.”

Fair comment, yet what we are finding is that the fiduciary mindset, regardless of mandate, drives quality advisors sitting in the broker dealer world – wirehouse, regional firm, or IBD – to question whether the model under which they work is the ideal place to serve their clients. If, in fact, these folks determine that their ability to offer optimal solutions to clients is being limited, then many already have or will continue to vote with their feet and change models. It’s one of the reasons for the significant flow of assets toward the RIA space.

I’m not debating regulatory legalities, because if we were, I would have to agree with the naysayers. I am talking about a “mindset”.

So when the time comes, for example, for the “stay versus go” decision, it is that very mindset that drives the outcome.