Broker Check

Our Philosophy: Moving Forward with Innovation

May 23, 2016
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In an article I read a few years back, I was struck by a piece of advice offered by Paul Graham, a venture capitalist and highly respected entrepreneur. Graham compared running a business to a science experiment, claiming leaders needed to be ready to "follow the trail wherever it leads" rather than remaining stubborn and ignoring the results placed in front of you.

Graham encouraged everyone to be open to change, which is pertinent advice considering change is just about the only constant in today's world. Regardless of the industry, we must be willing to adapt or we're preparing ourselves for failure. 

Retirement Revamps

Earlier last month, the Department of Labor introduced a few new – yet long-awaited – fiduciary regulations. Under these new rules, retirement brokers (investment professionals?) must now place the best interests of their clients first rather than recommending investments that would return the broker a higher commission or fee. All investment planners will now be required to meet what's referred to as the "fiduciary standard" – the highest degree of customer care in the industry. 

Harold Evensky, a personal financial planning professor at Texas Tech University, explained the law exceptionally well:

"It simply means that given two choices of the same basic investment, brokers will be required to offer the cheapest ones, as opposed to the regular ones that are more expensive."

While most brokers will almost always choose the cheapest investment, they weren't legally obligated to do so prior to the introduction of these new regulations. Now, brokers must prove their actions are directly suitable and compliant with the best interests of their clients prior to making any investment. 

Change as a Catalyst

When our industry changes, we must pivot with it. Our ability to innovate to the new technologies and regulations often directly correlates to the overall success of our businesses.

Now, with these new regulations being introduced to the finance industry – specifically the financial planning sector – we're presented with the opportunity to innovate and alter our practices in order to better serve our clients and their families. Investment professionals have a duty to best serve their clients, and, if the path for serving them shifts, it becomes our responsibility to shift with it. 

These recent changes mean a higher degree of accountability will be placed on those whom you're entrusting with your wealth, future and prosperity—something all investments professionals should have already prioritized. Now, investors are granted reassurances that every monetary decision made by their investment managers is done with their best interests at the forefront. 

For planners, these will only help us become more transparent and more open with our clients, allowing all of us to cultivate even more meaningful and trusting relationships. While we always approach each and every investment with a "client first" mindset, these regulations will now protect all parties from the small percentage of unethical professionals more concerned with their own well-being instead of the well-being of their clients and their families.

There's also a negative side – or at least a "worrisome" angle – here: Because every decision needs to be proven to be in the clients' best interest, managing smaller policies/amounts will become tedious, and some planners may start avoiding these types of accounts.

Building Our Bond

As investment professionals, we strive to build lasting relationships with our clients on both professional and personal levels. These regulations will help us cultivate stronger, more transparent relationships with all our clients. In turn, we'll be able to build investment portfolios rooted in trust, a goal of every investment professional. You can now sleep soundly knowing our interests and your interests are one in the same. 

John Lindsey is President and CEO of Lindsey & Lindsey Wealth Management. After years of experience in executive leadership and finance, John founded Lindsey & Lindsey Wealth Management in 2012 to better serve his client base with an expanded universe of investment offerings. His biggest piece of advice is to always stay true to yourself and never compromise when that compromise would endanger your principles.