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The one thing no RIA should forget to thank God for at Thanksgiving

Instead of clients carving you up like a turkey they place an astounding amount of trust in you and your business model

Wednesday, November 22, 2017 – 10:37 PM by Brooke Southall
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Brooke Southall: Clients trust that you are better than the self-direction, broker-direction, assisted self-direction and robo-direction that TV ads daily push at them.

Brooke's Note: This article is about trust between RIAs and investors. But it wells up from what I feel thankful for here on Thanksgiving eve. The foundation of the success at RIABiz as we ramble through our ninth year is your trust as readers in the thousands of small decisions we make every month. What is newsworthy? What angle is fair? Which sources balance the story? What thoughts exist in our dark hearts (only in the presence of pumpkin pie) as we write? It goes on. Day in and day out I see people trusting in this rollicking process that is protected explicitly by the Constitution. We don't take it for granted that you gamely participate. We are actively grateful. Happy Thanksgiving! 

It's the brain surgeon using a new technique to save your child's life; the fireman who tells you to jump six stories, saying "we got you"; the lawyer who takes on your case determining whether your pants get sued off; the engineer who signs off before the manned rocket launches -- these are extreme cases of people trusting professionals.

But on a day-to-day basis, clients trust RIAs like few others. Because of no scalpels, no capsule water landings and no judge's gavels, the trust an investor puts into a financial advisor can seem humdrum and get taken for granted. How many RIAs are there? No, seriously, how many?

It shouldn't.

An investor's trust starts with the lifetime of value and energy they have stored, their forbears put aside and how it ends up in financial assets invisible to the senses. See: What exactly is an RIA?


The assets are held in digital form and in turn mostly get allocated through unknowable processes into loans and ownership of companies. 

The advisor gets put in charge of managing that abstraction known as "wealth" and with it is given a level of trust and discretion that is hard to fathom. Not only do advisors make most decisions without checking with the client but they are also entrusted with choosing a whole series of trustworthy partners from an array of asset managers to custodians and technologists. 

To cap it off, advisors are entrusted with paying themselves -- often quarterly -- out of their clients' assets and often without so much as sending a receipt. See: The 4 biggest investment performance myths -- and how they can torpedo advisor-client trust.

But assets are only one level of trust. It's only money!

Advisors are also put in charge of an investor's darkest secrets. In America, most people guard their financial details with the vigilance accorded to national defense secrets at the CIA. See: Credit Suisse punts its private banking business to Wells Fargo.

Financial problems -- whether they involve a declining business, the drain of supporting a troubled relative or just the fact that you aren't as rich as you let on -- are the dirtiest and grungiest kinds of laundry. The advisor sees it all.

And, they also have a share in the of shaping of dreams, financially determined or not. 

Trust in trust

Consider, too, that none of this trust is built on anything much resembling a process based on due diligence. Chances are that your client's trust was originally based on little more than another client sharing their trust in you, the advisor.

Add to all this the fact that clients silently suffer your jargon-filled bloviation, your inability to deliver a client portal, your bad coffee, your penchant for camping trips and European vacations that take you off grid, and that terrible website with photos of you and your staff posing stiffly like bankers from 1958. See: The one act of image-ination RIA's must undertake before debuting on social media.

Even with all this, clients trust that you are better than the self-direction, broker-direction, assisted self-direction and robo-direction that TV ads daily push at them.

So as Thanksgiving arrives, think for a second about God's grace -- or just the universal Force -- that makes trust undergird your business and your life. It is a wonder. It is something that not only gets me up in the morning at RIABiz but makes me look eagerly forward to 2018.

Working to earn and keep clients' trust gets you up in the morning 250 days a year.

Tomorrow, it is something to merely be thankful for as you ignore the office and trust that your clients -- in our case, readers -- will understand.



November 28, 2017 — 11:45 AM
season greetings & happy holidays!

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