Ethics
Selling Truth as a Differentiator
The last few years have been a period of heightened scrutiny and scandal for the financial services industry. Most recently, the SEC issued a report on pension consultants regarding conflicts of interest and the objectivity of advice given to retirement plan sponsors. It?s become vital to the success of insurance and financial advisors that they differentiate themselves with their exemplary ethics, that they operate by a higher moral code and that they communicate that higher standard to their clients. Why? Because research proves that ethics builds trust, and trust sells ? in the long-term and - in the short-term, as well.
Taken from the SEC report and the information provided by the Dept of Labor, below are Affirmations of Ethical Behavior for Financial and Insurance Industry Representatives. The Ten Affirmations of Ethical Behavior
1. If registered with the SEC or a state securities regulator as an investment adviser I will provide my clients with all the disclosures required under those laws (including Part II of Form ADY).
2. I will describe any relationship I have with money managers that I recommend, consider for recommendation, or otherwise mention to the plan.
3. I will describe any payments I receive from money managers I recommend, consider for recommendation, or otherwise mention to the plan for consideration.
4. I have prepared policies and procedures to address conflicts of interest or to prevent conflicting payments or relationships from being a factor when providing advice to my clients.
5. I will monitor and reconcile the amount of commissions paid when using brokerage commissions to pay consulting fees and alert plan sponsors when consulting fees have been paid in full.
6. I have established procedural steps to ensure that the plan receives the best execution for its securities trades when the consulting fees are paid with the plan?s brokerage commissions.
7. I will describe any arrangements with broker-dealers under which I will benefit if money managers place trades for their clients with such broker-dealers.
8. If hired, I will acknowledge in writing whether or not I have a fiduciary obligation as an investment adviser to the plan while providing consulting services.
9. I will acknowledge whether or not I consider myself a fiduciary under ERISA with respect to the recommendations I provide the plan?
10. I will describe the percentage of my plan clients that utilize money managers, investment funds, brokerage services or other service providers from whom I receive fees?
Post these affirmations on your website and include them in your marketing materials. If you complete the affirmations for prospective clients, you will have distanced yourself from the scandal ridden and differentiated yourself in an industry where the value added to products and services is quickly commoditized.
Lawrence Groves is the Director of the small business retirement administration services for the Retirement Group with the Solo 401k administration program at http://www.solo-k.com and the special 401(k) ?Free for Three? ? administration program.
Lawrence comes to his clients with over 25 years as an experienced expert in plan design, administration, and compliance. Lawrence works closely with for profit, non-profit, and government agencies on 401(k), 403(b), 457, Profit Sharing, and Puerto Rican 165(e) small business plans.
Lawrence can be reached at Lawrence@solo-k.com or 727.844.7000
Lawrence Groves
Tags: 401k, 403b, 457, profit sharing, small business, retirement pensionSimilar articles
Never, Ever Bad Mouth Your Competition . . . Directly
It?s never a good idea to speak evil of anyone, you end up sounding like a gossip, or what?s worse you sound like someone with an axe to grind, prejudiced and out to do harm, so that you gain greater stature. Read more →Post-Katrina Role Of Property Insurers Threaten Consumers Nationwide
?Prediction is very hard, especially when it?s about the future.? Yogi BerraGiven the focus on the recent one-year anniversary of Hurricane Katrina by the media and government officials and its label as the most costly catastrophic disaster in United States history, there has been little focus on the nationwide impact the property and casualty insurance industry has started to impart on homeowners and businesses in a post-Katrina world. Read more →Six Reasons to Give
If you run a business, you undoubtedly feel many pressures on your time and money. Why would you want to add "giving to the community" to your "to do" list? Read more →Temptations, White Lies, Sales, and Seeing Eye Dogs
A man went into the local Big and Tall Man's store several times looking for a job. Finally, on his seventh visit, the store's owner told him, "I will tell you what. Read more →Aphorism
Charlie [Munger] and I would be glad to take any money management organization in the world managing more than $US10 billion and we would be willing to bet that their aggregate investment (performance) will be poorer than a no-load, very low cost index fu
Warren Buffett