In our previous blog we highlighted the characteristics of a good broker, one who goes the extra mile and acts as more than simply one who invests money on behalf of his or her clients in order to be successful. But what exactly is that extra mile when it comes to investment brokers, and how far is too far for broker-client relationships?
Financial planners are increasingly more entwined in their clients’ lives, offering extra services and helping clients understand their emotional ties to money. In one article CNBC described some advisers as “surrogate family members and community organizers” for their clients.
Although investment brokers know that money is a very personal matter — retirement accounts, children’s college funds, insurance policies– is treating a broker like a family member going too far?
“People tell us things they don’t even tell their clergy or therapists,” one financial advisor explained.
Of course, it is essential for a broker to have solid working relationships with his or her clients.
But there is a fine line between being a trustworthy broker with a fiduciary relationship to the client and a broker who “is just like family.” Blurring those lines, experts say, can lead to decreased dividends and a breach in investor ethics.
What is the difference between a fiduciary relationship and a family-like relationship?
Some argue that there is a keyword missing from the enticing language likening financial advisors to therapists: integrity. Here are some considerations when working with brokers who are “like family:”
- The most important trait for a broker is to maintain his or her integrity. In order to have that characteristic, a broker cannot strive to be “just like family” to a client because that could skew the objectivity a broker should have when making investment decisions.
- The agenda of the client is the No. 1 priority. To have a family-like relationship could mean that the broker ends up manipulating or convincing his or her client to make decisions based on the broker’s preferences, not the client’s.
- If a family-like relationship occurs, it should be because the client has decided to trust his or her broker as a result of the broker’s superlative service, not because the broker sought to “sell a relationship” as part of the package.
- Lifelong clients are beneficial when it comes to financial matters, but these lengthy client-broker relationships should be built organically over years of solid advice and healthy returns on investments, not because a broker aggressively tried to get close to you.
What do clients actually want from their financial advisors?
A client’s wants and needs from finance professionals are simpler than one might think, according to Forbes.
Typically, clients want the following traits in the people who invest their money:
- Integrity – Is the broker honest? Fair? Does the client feel confident that the broker has his or her best interests in mind?
- Competency – Is he or she getting returns on investments and helping the client make sound financial decisions?
- Accessibility – Does the adviser return phone calls and emails? Does he or she provide the documentation sought by the client? Does the broker break down the information in a way that is easy for the client to understand?
- Amiable – Is he or she likeable? Is this person able to put the client at ease while using their expertise to explain the investment portfolio in a way that makes sense?
To safeguard against fraud or negligence, make sure that your relationship with your advisor is one that emphasizes fiduciary responsibility over friendship.
If you are an investor and believe you may be the victim of fraud or negligence, you may be able to pursue a claim against your stockbroker. Contact Fishman Haygood to learn what actions you may be able to take.