Fiduciary Standards

Put Your Clients First

The commitment to “paying yourself first” is one many financial advisors urge their clients to make. Professionals within the financial services industry have been repeating this mantra for so many years that it barely seems newsworthy. Unfortunately for the economic stability of many Americans, the overriding trend of “not” paying oneself first leaves many advisors touting the ideal, but with little or no client follow through.

Here are some scary statistics underscoring the lack of savings.

A recent survey by the Fed showed that 47 percent of respondents indicated they would struggle to meet a $400 emergency.

The Pew Charitable Trust found that 55 percent said they do not have enough savings to cover one month of living expenses.

A 2014 survey by Bank rate indicated 38 percent of Americans could not cover a $1,000 emergency room visit.

These numbers – and the economic lifestyles they represent – profoundly bother Jeffry J. Fruchtenicht, president of the Investment Center, based in Independence, Iowa. It is not what he wants for his clients, and it’s one big reason why client financial education plays an enormous role in the relationships he develops with clients.

“We are doing a terrible job as a country and as a society in teaching our people how to be financially independent,” Fruchtenicht asserted.

One of the first actions Fruchtenicht takes with new clients is to make sure that they even have a savings plan. Then, the notion of remaining invested – especially during volatile markets – quickly follows on the heels of savings as the next educational topic.

He has already taken clients through two major market shakers – the DotCom flop lasting from 2000 to 2002, and the Great Recession from 2007 to 2009 that was the result of the bursting of the housing bubble.

The secret to successfully getting through these events is to not avoid them. Don’t pull out of the market. “Perhaps adjust your position somewhat, but don’t pull your investments out,” he said. Stay in and stay positioned, in order to take advantage of the rebound.

“One of my biggest successes in this business has been keeping clients invested in those tough markets,” he said. “It has paid them tremendous rewards to remain in the market. Every one of my clients who remained in the market are much farther ahead today than they would have been if they had exited the market when it turned volatile. They listened when I told them that now is the time to stay in and to add to your positions if you can.”

Fruchtenicht has seen market ups and downs since he was a young child. His earliest interest in the investing world came at the tender age of five when his maternal grandfather – an avid investor– began teaching his grandson about the industry.

Little did his grandfather know that he was fostering an interest that would grow into a lifelong career when he sat with the young lad, teaching him about how to select stocks and how to read charts.

When Fruchtenicht’s full-time military career in the Army National Guard seemed threatened by budget woes, his first inclination was to follow his passion and put his economics degree to work and head to the financial services industry.

After being told by a supervisor that there was no telling how many days of full-time employment he would receive in the coming year, Fruchtenicht remembers leaving the post and heading directly to the nearest men’s store to be measured for the uniform he’d need in a new career.

He had his resume typeset the next day and by the end of the week, he had a job. Within a few weeks, he obtained the necessary industry certifications. Today he has seven offices within the firm he heads. Fruchtenicht did continue his career as an officer in the Army National Guard on a part-time basis and retired with over 20 years of service.

“We’ve built a super team,” he said as he looked back on the nearly 23 years that the Investment Center has been in operation. Some of his team members include Ann Vanengelenburg, who has over 15 years of financial services experience. Additionally, with military service being important to him, Fruchtenicht hired Mikel Markey, who served as an aircraft mechanic in the Air National Guard and Jordan Bathen, who continues to serve as an officer in the Marine Corps Reserves.

From the beginning, Fruchtenicht put the interests of his clients first. It may not have been an official fiduciary standard such as is being bandied about the industry now. But for Fruchtenicht, taking care of the client first was always a given. It’s why he isn’t particularly concerned about new regulations aimed at defining the role and the work of a fiduciary.

“We always felt we were fiduciaries. Ethics say to put your clients first. We live by that,” he said. “At the end of the day, there will be further disclosures and further paperwork for the client to sign, but the overall operation of our business is not going to change – because we are already down the road anyway.”

He hears the national discussion centered on whether current fee disclosure statements are adequate for informing clients of how much transactions will cost them.

It’s an important question, he agrees, but not necessarily the most important one when it comes to the accumulation of retirement savings or even the management of such.

Fruchtenicht counters, “We are so worried about disclosing, but I see the bigger problem with the 401(k) industry being the lack of participation or the lack of full participation,” he said, adding, ”Most 401(k) plans have reasonable costs. The problem is that workers are not paying themselves first to create the wealth for their future. Rather than worrying about if they are spending an extra 11 cents in their fee structure, they ought to be worried about getting themselves actively involved in their plans and in building that wealth they are going to need.”

Fruchtenicht has a passion to guide and educate his clients, who include pre-retirees, retirees, farmers and business people, to make these difficult financial decisions and looks forward each opportunity he is given to do so.

Learn more about the Investment Center online at

Jeffry Fruchtenicht  is a Registered Representative offering Securities and Advisory Services through UNITED PLANNERS FINANCIAL SERVICES Member: FINRA, SIPC. Investment Center and United Planners are not affiliated.Not a Deposit.  Not FDIC Insured. Not Insured by any Federal Government Agency. Not Guaranteed by the bank. May go down in value.

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