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Why Transparency Matters in a Fiduciary Relationship

Hey, everyone thanks for joining. Today, I will be speaking with our chief compliance officer, Joe Mcquaid, about transparency. It’s a very simple topic with a wide-ranging impact on your actual financial planning goals. The thought for the day is understanding what transparency is. Moreover, it’s the ability to see everything that you own in one place, updated in real-time so that you can plan effectively. To see how we do it, listen to this podcast and know it’s very readily available no matter where you are. There are tools out there that you can use to plug in and plan effectively. If you don’t have those tools go out and get them because they are fundamental in making sure you can plan effectively for your future.

Transparency In A Nutshell

Why is transparency a fundamental tenet of Family Fortune Financial? It boils down to one of our clients, an executive at a fairly large Fortune 500 or 100 company, trying to put all the pieces of her life together. What happens a lot of times is advisors will say, they can show you how you’re doing with them, but they can’t show you how everything else is doing. In the situation with this client, she wanted to know if she was going to be okay because her executive savings plan was ten times greater than what we were managing. The answer was well I can tell you how we’re doing but I can’t tell you how everything else is going. 

 

I knew I had to find a way to make her situation work for her. She shouldn’t be penalized because we can’t hold it. She needed to be able to have the ability to see everything transparently in one place and have updates in real-time. That way, she could utilize the information whenever she wants to be able to make life decisions. It’s fundamental for clients to be able to do that. It doesn’t matter whether it’s a retirement savings plan, a regular investment plan, real estate, or a direct investment in something. A business like we have should be able to look at everything someone has transparently. If you can do that, then you can say, you can plan on it transparently. 

 

The Importance Of Forecasting

Why is it so important for people to be able to see everything in one place? When people engage an advisor, a lot of times it’s because they want to know their financial future is okay. They want to know: Can I grow my wealth? When can I retire? Can I take care of my kids? The answer to all of those questions boils down to forecasting. When you plan something it can be scary because you may not want to hear the news. This prompts people into wanting a plan with some kind of information. If the plan is formulated without transparency, it is garbage. However, If you can pull it all in, then it becomes dynamic. Transparency isn’t finite. Therefore if we counter and have the client bring in their statements so we can tell them where they’re at today, we can plan off of it. In a moment you can do that in a vacuum but people aren’t in a moment, people are dynamic. So the ability to have transparency and forecast appropriately comes with dynamic planning. 

 

Advanced Technology Tracks Performance

It is fundamental for a client to be able to sleep soundly, knowing that their plan is truly what it says it is. How does Family Fortune Financial go about providing this type of service to their clients? We work with a world-class technology platform, and we spent a good amount of time vetting different platforms that allow anything that we need in this digital world. It’s all secure, but we pull in similar data that a client would need. If anybody’s on refinance lately, they’ll typically say, log into your bank account and we can show you what it is. We use a similar type of technology and it all flows to one place. With that technology, we get a screen with the information every single day so we can show people how their performance is because it’s constantly updating from every different source. Again it’s secure with multi-factor authentication. We don’t want anybody thinking we’re just going to be casually plugging things in. Nevertheless, it is fundamental if you’re going to plan. 

 

If someone calls and says they are looking to sell a home and buy a different one, how should they do it? We can answer that question because we know exactly where they are at that moment. Another example would be a client saying they want to retire three years early and asking if that’s possible. We can see where they are at that moment and give them an honest answer, as opposed to telling them to pull out statements or even worse forecasts based on old data. We have fresh data, fresh performance, and we can tell people this is where we’re at and advise them, regardless of what the situation is at any given point. 

 

Transparency In Performance And Costs

When you’re viewing the client’s entire financial picture, does that sometimes lead to difficult conversations about performance and cost? Absolutely. One of the main things we do to balance that is to go into the conversation transparently. We show them where we’re at and we just charge a flat fee. Whereas other people may have asset base fees but they charge in a bunch of different ways. The fees are transparent if you can show people side by side, here’s where those fees are, and here’s where our fees are. Therefore it’s not usually a difficult conversation for us. 

 

Another important aspect is the offers. This is a collaborative platform that we can share with the client’s permission to their other advisors. Our four fundamental pillars are access, transparency, fiduciary, responsibility, and community. If you have a collaborative estate planning attorney, a collaborative insurance agent, or other collaborative advisors, we can give them access to this platform and collaborate on the client’s behalf. For example, let’s say you have a question on estate planning concerning how to best give your estate to your children or how to best sell a business. We can allow people to see this situation and give their advice as opposed to going back to the client and asking them to bring something to us. We bring access to the other advisors. And if they’re collaborative, it makes the client’s life easier. 

 

Transparency Is Appreciated

What is the most surprising point regarding transparency that has been seen with clients here? It’s the fact of disbelief. The disbelief at what they’re currently charged is pretty shocking, especially when it comes to annuities. People are blown away by how expensive things are. It is presented to them so no one was sold something without it being presented, but it’s usually presented inside of a perspective. In reality, things are more expensive than they initially thought. When you look at things side by side, specifically when you’re paid a commission to sell something, you’ll take the commission, especially if it’s hidden. That said, when we step in and unpack those costs, people tend to be surprised. There is usually a period of disbelief where they don’t believe us. Then they wonder how they lived without this before. This all goes back to the objective that people want to know how they are doing. At times they assume everything is okay because it’s just too hard to get the information. It could be monitored by writing down where you’re at every single day, but no one wants to do that. In this particular case, the client is surprised they can slice it up and see how they did last week, month, or year. It can be broken down into specific accounts and become dynamic by looking at the actual performance. This makes people feel a lot more comfortable and confident with where things are going to go. Then to the point of surprise, people wonder how they ever went with blind faith before because now they can see everything and it feels a lot better. 

Advisory services are offered through Family Fortune Financial, LLC a d/b/a of Eudaimonia Partners, LLC (the “Advisor”), a Registered Investment Adviser. Services are only offered to clients or prospective clients where representatives are properly licensed or exempt from licensure. This website is solely for informational purposes. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by the Advisor unless a wealth management agreement is in place.

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