Doing the right thing every time, embodying the Golden Rule. That’s how Maynard L. Keller, founder of the Virginia-based American Financial Planning, defines fiduciary, and it’s one reason he started his firm 11 years ago. He notes that large product industries, such as mutual fund and insurance companies, paid tens of millions to lobbyists to eliminate the fiduciary rule. He wants a business model to always do the right thing for clients. “When clients are seniors, they don’t have time to recover from bad products or bad advice,” he says. “Clients depend on us.” 
Don’t Have to Be a Mechanic to Enjoy Cars
Keller decries the jargon common in the industry. He restores cars as a hobby, and notes you don’t have to be a mechanic to enjoy cars, but need enough information to know where the brakes are and other crucial details. “Clients should know how an investment works, the risks, performance and what to expect,” he says. “They don’t need to get into the nitty gritty of details. It’s our job to understand the details of the portfolio and planning.”
Keeping Retirement Planning Simple
Most people zone out when viewing retirement planning packaging with hundreds of pages and graphs. Keller’s approach is simple. Instead of big reports, they work on a cash-flow basis. “We look at a client’s current cash flow– income, expenses - and work toward the retirement date and what will change,” he says. Perhaps the mortgage is paid off, but the salary is gone. “We look at income sources in retirement and see if there’s a difference. Often there is, which requires bigger savings now and a certain rate of return on investments,” according to Keller. “We get away from reams of paper and color charts and put it in a way the client can really understand, now and in the future.”
The fault with target-based retirement funds is the assumption that when a client retires at 65, everyone goes into cash, such as CDs and money market funds, but the retiree could live another 30 years. “Gone are the days of 5 percent money market rates. It comes down to clients having to take more risk than they would have years ago, so their money keeps pace with the level of inflation,” he says, so clients are often kept invested well into their 70s and 80s, in a portfolio with more risk. “You’re not keeping up with the cost of living otherwise, so investments must do better than inflation,” he says.
Great Need for Financial Literacy
Perhaps because he is a former high school teacher, Keller sees financial literacy as extremely important. “Financial literacy starts in the home with parents and is reinforced with experiences. I often meet with clients and their teens and children to teach them a few financial tips that can help for life,” he says, adding that students may listen better to a financial advisor than mom and dad. When people have basic financial education, it helps them in other planning issues. He points out that knowledge is abundant, but wisdom is scarce, and the latter applies to specific situations.
Along with financial literacy, Keller would like to see changes in regulation regarding titles for fiduciary purposes, whether someone is a broker, advisor or a planner. “People need to be aware of the difference. It would simplify fiduciary enforcement and solve part of the dilemma,” he says.
For more information, visit American Financial Planning
