Since my last post, Building trust, fiduciary rule or not, my conversations with advisors have swirled around operating in a fiduciary environment. The fiduciary standard comes with challenges that, unsurprisingly, advisors are eager to meet head-on. So I find myself answering different forms of the same question:

“How can I raise the bar to really thrive in a fiduciary landscape?”

The answer: It starts with trust.

The latest, soon-to-be-published installment in our Advised investor insights™ research series found that boosting trust levels can help deliver major benefits to a practice regarding client retention and referrals (more on that later this year).

Cultivating trust isn’t a onetime achievement or the sole key to success in the fiduciary landscape. You’ll need to continually showcase your qualities—such as trustworthiness—to prospective and longtime clients alike.

I recommend following our five best practices for thriving in a fiduciary environment.

 

1. Understand investor options.

Embrace your role as a comprehensive planner and wealth manager to separate your practice from all-in-one funds, stock pickers, robos, and other alternatives that can’t replicate everything you deliver to your clients.

Expanding your repertoire and professional network will make conversations surrounding your fee more meaningful for clients. They’ll be happy to learn you can perform a wide range of services that they might have to pay another professional for otherwise.

 

2. Develop a value statement.

It could take a handful of meetings—or more—to secure a prospective client’s business. But what if you could cut that number in half? A strong value statement can help. Nothing beats a strong first impression, and you get only one chance to make one.

You’ll find that the Client Relationship Center™ on our advisors’ website has great resources for developing your value statement, from customizable document builders to step-by-step guides for optimizing each component. Use them to define what you do for clients, and set up conversations surrounding trust and your value as an advisor.

 

3. Quantify your value.

Effectively expressing the value you provide—in dollars or basis points—is essential to establishing a foundation of trust and transparency with clients.

Putting a value on your value: Quantifying Vanguard Advisor’s Alpha® outlines seven value-add modules related to portfolio construction, wealth management, and behavioral coaching that you can use to support conversations regarding your value.

 

4. Set a strategy.

The active-passive decision is no longer a binary choice. Consider using low-cost index funds or ETFs to capture world-market beta at the core and reduce return variability, then consider selecting active managers to complement your core investments and reach for outperformance.

After you’ve set a strategy for a client and helped him or her understand what to expect, pick the right partner to help you execute it.

 

5. Pick a partner.

You want a partner whose operating model aligns with your and your clients’ best interests. Partner with companies that show integrity, offer a diverse product lineup, and keep their costs as low as possible.

Operating in a fiduciary landscape is all about doing what’s best for clients, and giving investors the best chance for investment success has been our mantra since day one. What better way to reinforce your trustworthiness than by teaming with us?

 

I truly believe that by adhering to these best practices—with a little help from Vanguard—you’ll excel in this new environment.