Fiduciary Standards

Fee Disclosure Builds Client Trust

Recent moves by the federal government to create a uniform fiduciary standard suggest that financial planning professionals who are paid via commission need a ruling in place to ensure that they are always acting in their clients’ best interests.

But perhaps another perspective should be considered that doesn’t paint the advisor as a potential bad guy – or gal. For instance, what should be considered is how day-to-day business in a financial planning firm is conducted. Does the advisor fully disclose their compensation methodology to the client?

The answer to that is a game-changer if you are an investor interviewing potential financial advisors to determine if there is a good fit, particularly if that advisor is James Christian, CLU®, ChFC®, RICP®

As owner of Jim Christian, Inc., based in Lakeville, Minnesota, Christian operates his business using three current compensation models within the financial services industry.
Currently, one percent of his work is billed out on an hourly basis. Another 45 percent is commission-based. The remaining 54 percent is fee-only. Not only does it work for him, more importantly, he believes it works for his clients.

This mix is becoming scarce in an industry running toward the fee-only approach after recent scandals left consumer and government watchdogs demanding increased transparency – particularly regarding the fees investors pay.

That expectation is one Christian said he gladly meets.

“We disclose to clients how much they pay us whether they see it or not. For example, when it is a commission product, we tell them how much it is,” Christian said. “I believe it is important for a client to know how much they are paying in fees to be able to judge the value and level of service they will receive.”

Christian has dubbed his comprehensive approach with the acronym, “PERTI.”

It means he, as an advisor, is responsible to verify that a client has the following in place: Protection plans, Estate plans, Retirement income plans, Tax reduction strategies and Investment plans.

If any one of those is missing or insufficient, a client’s plan is incomplete, he said.

“I like to say that we like to be the ‘pleasantly persistent advisor,’ and not the nagging type,” Christian said, noting that he believes it is his responsibility to keep a client on track with completing each of those financial security checklist items, and he turns to other professionals for accountability, reinforcement and beneficial outcomes in the client’s best interest.

Collaboration with those whose expertise is in accounting, estate planning, legal matters, property and casualty insurance, and real estate is a key component to his firm’s success on behalf of clients.

“It is critical that investors ask potential advisors what their philosophy is regarding collaboration,” Christian said. “None of us is smart enough to know everything. We really do need to rely on one another as professionals to help keep our clients fully educated and to maintain their financial plan.”

For more information on Jim Christian, Inc., visit: jcretire.com

Securities and investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC. Insurance services offered through Jim Christian Inc. and is not affiliated with FSC Securities Corporation.

 

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