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Practicing Fiduciary Standards
​by Thinking Differently


Bernie DeLaRosa, ​CFP®, ChFC® CRPC®, CLU®, APMA®, CASL®, BFA™
Managing Business Consultant

 - Mergers/Acquisitions/Practice Sales
 - Legal Agreement Definition
​ - Advisor Leadership Skills
 - Initial Practice Assessment

Your brain is a very powerful tool. If you sharpen your thinking skills, it can create incredible benefits. Objectivity, in particular, is one of the ways we like to see this brainpower applied.

When you are initially introduced to a situation and start with advice already in mind, listening only for the opportunity to lay your opinion down, you are delivering a biased position. When you add flattering words to indicate that you have taken the facts presented into account, when you actually have not, you are delivering false testimony.

Perhaps these are strong accusations, but this issue has caused a great stir in our industry and it presents us with a great opportunity. In the rest of this article, we will lay out before you a simple, yet powerful plan of action intended to help you turn this current situation into both a business and personal advantage.

Do you recall when we were inundated with a myriad of new rules just a couple of years ago? Although the banter has waned, we are left with whole new sections of our compliance manual. Still, the fervor that began this struggle has not entirely dissipated. Now that the regulatory activity has diminished, the advisors and their prospects have taken up arms and it is an all-out war for winning and retaining savvy and prized clients. I think history will prove this time as a great opportunity for each of us.

Given our particular business model, we can rise from the ashes to birth a whole new understanding of the value of advice…unbiased, objective advice. Perhaps the new focus on the fiduciary standard is a friendly, non-compulsory option that allows us to build client relationships that utilize our holistic financial planning to build a strong bridge between dreams and lifetime accomplishment.

Instead of navigating the complexities of creating more laws, we are now left with common sense and the service-oriented opportunity to decide how we will implement our own recipe for the appetite that has been created to serve up something more satisfying to the marketplace. I believe we can create a desirable and definitive differentiation.

Let’s start with a bit of an extreme example. Have you ever known anyone who is so self-centered that they don’t even recognize when they are putting off people around them? Does someone particular come to mind? How does that person make you feel? What is the likelihood that you would pay money to spend more time around them? You probably would go out of your way to avoid them, wouldn’t you? I know our audience is not that egocentric, but we do have a natural tendency to consider things primarily from our own vantage point. And that is okay, provided that we don’t stop short and end our mental processing there.

Objectivity allows you to get out of your own way. Sometimes we see things from only one perspective, our own. The idea of being objective is to look at things from a higher platform.

Let’s go through this thought process together and see how we can all contribute to a great client experience while providing strong compliance and relationship building simultaneously. Most importantly, if done correctly, it should also increase the conviction you have in making the recommendation and the chance that you will gain the client’s acceptance.

It takes training to come to objective conclusions, but here are some simple steps to help jumpstart the process:

  1. Recognize and acknowledge your biases in a situation. Set those aside long enough to see things from the vantage point of other stakeholders.

  2. Consider the options from which you can choose. Is the array broad enough to provide a well-balanced view or will you need to do additional research to build out your choices?

  3. Acknowledge the stakeholder’s interests in their recommendations. Ask probing questions and consider not just what other stakeholders tell you, but what they do not say.

  4. Lay out observations and key data.

  5. Filter observations and relevant data through thought processes:
    1. ​​Inductive Reasoning – the premises are viewed as giving evidence to the correctness of the conclusion: theory, hypothesis, observation, confirmation (Sherlock Holmes-style
    2. Abductive Reasoning – to take away from the given information available, what is the most logical conclusion: incomplete observations to a general conclusion (Juror style)
    3. Deductive Reasoning – uses facts, rules, definitions or properties to arrive at a conclusion: theory, hypothesis, pattern, observation (Aristotle style)
    4. Intuitive Reasoning – being open to information and processing quickly based on a synthesis of prior knowledge and gut instinct (Albert Einstein style)
    5. Strategic Thinking​
      1. Envisioning – forward thinking
      2. Analyzing – mathematical thinking
      3. Evaluating – critical thinking
      4. Modifying- creative thinking
      5. Incubating – thinking about information for a period of time
    6. Integrating – holistic thinking: how ideas and solutions fit
    7. Perceptual Thinking – insightful; able to see things others cannot
    8. Conceptual Thinking – abstract-level ability to analyze hypothetical situations
    9. Creative Thinking – innovative, fresh perspective

  6. List the pros and cons and weigh the matters listed to determine the most logical and intuitive answer.

  7. Identify the rationale for making the recommendation.

  8. Once you have made a recommendation and it has been accepted, measure expected outcomes against actual results moving forward.

  9. Make adjustments accordingly.

Many people will process through these steps relatively quickly. I urge you to slow down a time or two to recognize how you are processing data and if any of these steps are missing. If you would like to learn more about any of these steps or ideas, please let us know and we will send you additional information.

If you can articulate succinctly the parameters and process you use to create your recommendation, you will win greater confidence in and acceptance of your proposals. You will also achieve the intended purpose behind the entire focus on fiduciary standard and gain acceptance not only by your client, but also by your colleagues, other advisors to your client, and your compliance department.

We think this topic on thinking skills is so critical, we would be willing to do a WebEx training on it if there is enough interest. Let us know what you think!