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The 5 Attributes That Make a Financial Advisor a “Real” Fiduciary


Wirehouse advisors are recognizing that being a true fiduciary is impossible as an employee—and it’s adding more fuel to the flow of movement to independence.

Most wirehouse advisors consider themselves fiduciaries. That is, in practice, they make every attempt to put clients first and make all decisions with their best interests in mind. But in reality, while the advisor’s mindset and heart may be in the right place, the very nature of working for a brokerage firm makes it impossible to be a true fiduciary.

Wirehouse advisors tend to drink their firms’ Kool-Aid, believing they have access to complete open architecture with respect to technology and platform. But it is the recognition that there are, in fact, limitations to what they can access that’s drawing many away from the wirehouse space and towards independence.

Recently, I had the honor of interviewing Mark Tibergien, CEO of BNY Mellon Pershing Advisor Solutions, for an upcoming podcast episode, and the notion of what makes an advisor a fiduciary was a topic that we spent a good deal of time on.

“As we look at the evolution of the financial services profession, consumers, investors and clients are demanding a different relationship—that is, not just about what product is going to be sold to them, but what their advisor is going to do that will be transformative for their lives,” Tibergien stated.

It’s this “transformative” experience that clients are looking for which is further driving what it means for an advisor to be a “real” fiduciary.

So what characteristics are representative of a fiduciary model that can deliver this experience to clients?

Here are 5 that we discussed in our interview.

1. The ability to serve clients’ needs first.

Independent advisors have access to the “whole of market”—that is, the ability to shop “The Street” for products and solutions that can best serve their clients. Captive advisors are limited to the technology, products and platform approved by their firms—essentially they serve as “product advocates” for the firm, instead of “client advocates.”

2. A higher level of transparency.

In an independent firm, safe asset custody is separated from the advisor’s business, creating a process of checks and balances as an integral part of the advisor-client relationship.

3. Clearer payment structure.

Independent advisors aren’t paid on a grid, a performance measure that’s unrelated to client needs. So advisor-client interests are better aligned.

4. The ability to think and act strategically.

Large brokerage firms have grown to the point where managing to the lowest common denominator is a fact of life. Independent firm owners have the ability to look at their businesses from a strategic level—to invest in technology or implement customized services that they feel will have a positive impact on their efficiency and service delivery.

5. Optionality when it comes to managing growth, continuity and legacy.

As signing on to retirement programs has become a hot topic amongst wirehouse advisors and their next gen, independent advisors are looking at the future through a different lens. They recognize that they own the firm, and look at the business as a “business”—with a focus on planning for succession and continuity through inorganic growth, and building a legacy with a lifetime well beyond their own.

Related: How to Decide If Changing Firms – Again – Is the Right Thing for You and Your Clients

There’s a shift of dynamics in the wealth management space that is less about one model over another, and more about the role of the advisor in their clients’ lives. As Tibergien put it, “When we look at those who are breaking away and forming their own firms, we recognize that they’re making a fundamental change from being an employee to being a business owner, from being a broker to being a fiduciary advisor, and from being a product advocate to being a client advocate.”

Ultimately, a fiduciary operates without conflict and with one driving force: the clients’ best interests. As this sentiment amongst advisors grows, it will continue to serve as perhaps one of the primary catalysts for migration to the independent space.

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