The ethics of gratitude: Advice for newbies and others

As the Thanksgiving holiday rapidly approaches, perhaps we could take a moment out of our day to reflect on gratitude.

This means appreciating the clients that we already have. Further, we should respect those who are being appropriately serviced by another adviser enough to abstain from unethical means to obtain their business for ourselves. Perhaps it seems that these clients are there for the taking, but if we ignore the ethical considerations, we have failed not only our ill-begotten clients and ourselves, but also our industry.

The tenets of best practice dictate that we always put the interests of our clients — those who keep our businesses up and running — first.  Client education is one way of doing this; performing a benefits diagnostic is another. This not only helps our clients, but we help to better the reputation of our industry as a whole — in a sense, giving back to ourselves in the manner of ‘what goes around comes around’— something you might want to think about if you ever find yourself wondering what’s in this ethical behavior for you.

So, let’s venture into a scenario: an individual has just entered the employee benefits business. She immediately goes to her friends and relatives who own businesses to request an agent of record letter for those businesses.

Many times in this situation, the new adviser is not aware of, nor has she asked, how well her prospective client’s current adviser is serving the needs of his business. She might also neglect to ask if her potential client is happy with the level of professionalism and the advice that he is currently receiving. The potential client might also feel obliged to accept her services, given that she is his friend or family member, and he will not think to question the switch.

Therefore, it falls on the shoulders of the adviser to attend to the ethical considerations of signing a new client.

Unless we are acting professionally, that is, performing an initial diagnostic of a potential client, what right do we have to take away business from our fellow advisers, especially if we have not yet proven that we can act in a professional manner and enhance the valued services received by the client?

For those of you out there who perform benefits diagnostics and maintain an ethical approach to gaining new business, I applaud you! I offer you my gratitude for doing your part to raise the ethical bar for our industry and make the business world a better place.

As we come to the end of this month and give thanks, we should indeed offer our thanks to the industry that provides not only for ourselves, but also for those whom we love.

I wish all of my fellow advisers a bountiful and very happy Thanksgiving.=

Arnoff is the co-author of The Three R’s of Employee Benefits: Recruiting, Retention, Rewards. He will soon appear on the Wealth Channel at www.wealthchannel.com. Stay tuned!

New retirement plan delivered on a silver platter?

Here’s a scenario for you: a group health and wellness client you’ve represented for over ten years approaches you to be his/her adviser on a 401(k) plan.

Congrats! You’ve worked hard to position yourself as a valued adviser. No doubt you’d like to reap the fruits of your labor.

But your next action is extremely important. It may have not only ethical consequences, but legal ones as well. It is vital that you go forward with a “good karma” mindset — for both you and your client.

Since I don’t know you (or do I?), here’s the first of my two qualifying questions for you:

Are you both experienced and qualified to service your client’s retirement plan?

If not, take the high road! Tell your client you are grateful for the opportunity, but to service him/her better, you would like to bring in a colleague who specializes in this area. By doing so, you will probably save your health and welfare business, not to mention garnering your client’s further respect and appreciation.

If you cannot find a retirement specialist you know and trust, it is better to walk away from this scenario. Again, take the high road!

If you are properly licensed; if a retirement specialist sees no conflict of interest; and if the specialist has his/her broker-dealer’s approval; then you may receive compensation. Keep in mind that the broker-dealer will want proof of your licenses. Also, if the 401(k) is a registered product, the broker-dealer will insist that you are under its BD before any compensation may be granted to you.

Here’s another scenario: you have a handful of retirement plans that you are servicing. In this case, my question for you is: Have you asked your clients if they are looking for investment advice, or investment education as their adviser?

Listen carefully! There is both an ethical and a legal consideration here!

If your client wants investment advice for participants, are you an RIA? If you don’t know what that stands for, you’re not!

Please, please, for the integrity of our industry and to reduce your risk and the risk of the fiduciaries in this plan, say to your client, “I’d like you to consider engaging our services via the ‘certified computer education’ model versus the investment advice model. I would further recommend that if your staff needs investment advice, they use a fee-only CFP. This way, you are not endorsing me as an adviser and adding unnecessary exposure.”

By acting ethically, we find ourselves working well within the law.

The retirement plan may be delivered to you on the silver platter, but make sure your story won’t tarnish if the DOL comes knocking!

Are there any burning ethical issues that you believe our industry needs to address? Please let me know.

Arnoff is the co-author of The Three R’s of Employee Benefits: Recruiting, Retention, Rewards. He will soon appear on the Wealth Channel at www.wealthchannel.com. Stay tuned!