“Are you a fiduciary?” It’s a common question posed by investors, and rightfully so. They want to know that their financial best interests are being served. Although, perhaps the question behind the question is, “Can I trust you?”
It’s reflective of a shifting dynamic in the advisor-investor relationship. Investors are increasingly less satisfied with financial advisors simply filling the role of investment products coach. They want the guidance, of course, but they also want to feel as though the strategy behind the products — and the advisor relationship behind the strategy — are uniquely personal.1
Limitations May Lead to Investor Mistrust
The uniquely personal experience can be a stumbling block for advisors working in large brokerage firms. They are often tied to a finite set of firm-approved products and technologies, and develop financial strategies for their investors within those confines.1
What the brokerage firm advisor offers in these cases may be perfectly reasonable and fit an investor’s situation. However, an investor viewing the relationship through the “uniquely personal” lens may be left wondering if the decisions were made in their best interest — or in their best interest based on available products.
It’s an unsettling thought that could well be a catalyst for investor mistrust. It may also be a major difference between advisors interested in servicing accounts and those focused on fostering investor relationships.2
Building Uniquely Personal Relationships
Whether working for a brokerage firm or as an independent, financial advisors are able to serve investors as “true” fiduciaries provided they prioritize having open, honest conversations about goals leading up to and in retirement.
Meeting investors’ functional, emotional, and ethical needs establish and earn ongoing investor trust — intangible qualities they seek out and, once found, greatly value in an advisor.3
It also provides a roadmap for advisors to follow in developing financial strategies and choosing the appropriate products.
For example, presenting annuities as options is a practical way to address a common investor concern: outliving their money. Annuities generally present a lower risk of income exposure than low-fee ETFs or mutual funds — typical products within a brokerage house.4 They can provide a steady, guaranteed stream of income in retirement no matter how long an investor lives. That’s reassuring to aging Americans who want to ensure long-term sustainability, despite the potential for fewer gains and higher fees.
Including annuities within the overarching financial strategy also demonstrates that the advisor is listening to the investor and matching strategy with their unique needs. These are hallmarks of the “true” fiduciary acting in the investor’s best interest.
Having the freedom to act as a “true” fiduciary earns trust and builds uniquely personal relationships that are rewarding for investors and financial advisors alike. Help investors evaluate their need for advisor guidance by sharing our guide, When and Why Should I Hire a Financial Advisor?
Written by: Chad Mueller, Head of Annuity Sales
Chad is the Head of Annuity Sales for CUNA Mutual Group. In this role, he leads the Annuity Products wholesaling organization, develops and executes the go-to-market wholesale distribution strategy, and is responsible for achieving increased sales and market share objectives. Chad has more than 18 years of experience in the financial services industry and brings a wealth of knowledge focused on retirement planning.
1Wealth Management, What Makes a Financial Advisor a ‘True’ Fiduciary?, March 5, 2019
2Financial Advisor, What Managing a Client Relationship Means, October 1, 2018
3Investopedia, Trust: An Advisor’s Most Important Asset, October 17, 2019
4Forbes, Is Your Advisor A Real Fiduciary?, August 26, 2019