With implementation of the DOL’s fiduciary rule in a holding pattern, advisors may be tempted to downgrade its importance. Resist the temptation. Finding a standard that serves the investing public is an idea that is very popular among our clients, most consumer groups and this firm. It is also the right way to conduct our business. Even if the current rule is modified, delayed, re-written or even thrown to the scrap pile, the horse is long ago out of the barn and changes are coming. Now or later, professionals working to advise clients about how and where to invest their money will be held to a higher standard. For many it will be business as usual. For others a change in practice is required.
Developing and communicating a clear investment methodology to your clients would be a good place to begin. Many advisors, though not all, are subjecting their fee-paying clients to a hodge-podge of investment strategies which will be difficult to defend if asked to. Taking time to make sure your clients and your firm understands your investment methodology and communicating your strategy in writing via an IPS or some other written document will go a long way in removing any confusion your clients may have about how their money is being invested.
Finally, be consistent. Clients expect this. Regulators like it. Firms want it. Constantly changing the strategy on the path to achieving your client’s goals seems dangerous to everyone. A clear and consistent strategy is needed. Making the necessary changes to your fee-based business practices now, seems like a better solution than waiting for your clients to insist upon it.
Performance numbers are coming soon, very soon to SCI. We’ve had internal performance numbers since inception but decided to wait until we could have an outside party calculate the returns based on independent data. I know many of our advisors have been asking for this report and we’re pleased to be able to provide it. We also plan to disclose dispersion metrics which should help analyze SCI’s performance on a risk adjusted basis. Thank you for your patience and support of Salt Creek Investors.