Fiduciary Standards

The Value of Objectivity

Saving for retirement is a serious business. The risk of running out of money is real, and most investors can’t afford to make mistakes. They must have someone in their corner who puts their needs above a quick commission and who will protect their interests for the long haul.

Mike Booker, president of Financial Synergies Asset Management, recognized early in his career that a fee-based model was the best way to truly help his clients. “When you are charging a fee that’s based on performance rather than a commission or transaction fee, people feel more comfortable.”  

Booker added that one of his greatest professional successes was adopting a fee-only model during a time when commission was the industry norm. “With the fee-only format, you don’t make your money on the front end. You have to take care of your clients’ money every day. If a client decides you are not doing that, the paycheck stops.”

Booker attributes the fee-based model with enabling him to develop long-term client relationships built on the kind of trust that, in turn, makes the financial planning process more successful. “The greatest value anybody should seek in an advisor is objectivity,” he emphasized.

As an advisor who’s always acted as a fiduciary, Booker believes that a uniform standard would be helpful, as long as regulators don’t overdo what should otherwise be a straightforward expectation. “Really, the definition of fiduciary is pretty simple,” he said. “An advisor should exercise their best efforts and act in good faith in the best interest of the client.”

“For the financial services industry to get to the next level and be taken seriously, all financial professionals should willingly act as fiduciaries – not just as financial sales people. We have that minimum responsibility to our clients.”

Having a trust-based relationship inevitably helps clients meet their retirement income goals, even during volatile markets. Booker helps his clients establish long-range plans and then stick with those plans to avoid making emotionally-charged decisions and costly mistakes.

“It’s really important for all investors to remember that forecasters are wrong much of the time, and you really can’t time markets,” Booker said. “Getting too wrapped up in the noise created by the financial press and pundits can bring about great stress, and cause investors to make poor decisions based on short-term situations, destroying the best laid long-term investment plans.”
Booker’s main priority is ensuring that his clients will have the income they need in retirement, and he uses an income growth investment strategy to achieve it.

“The greatest threat to a retiree, by far, is running out of money,” Booker said. “The solution to reduce the risk of running out of money in retirement is to actually take a bit more risk by employing a healthy chunk of growth-type assets – like stocks – because retirees will need to grow their income throughout retirement.”

By pursuing growth, and by relegating social security to a conservative part of the plan, Booker gives his clients peace of mind that they’ll have the money they need when they need it.

For more information visit: www.finsyn.com

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