Proponents claim that the Labor Department’s fiduciary standard rule for retirement-account investing is beneficial to clients.

So what’s in it for financial advisors? Greater profitability. So says Dr. Bruce Weinstein, corporate ethics trainer and international speaker on ethics and honesty.

In an interview with BenefitsPRO's sister publication ThinkAdvisor, he discusses how advisors will, long-term, become more prosperous if they’re guided by the Labor rule. Further, he points out the top two crucial high-character qualities that FAs need to have and, at the other extreme, how the internet can permanently tarnish a practice.

Dr. Weinstein’s mantra: “Being ethical is cool — and profitable.” He argues that character is “the missing link to excellence.”

Dubbed “The Ethics Guy,” Dr. Weinstein, 56, has been a keynote speaker for numerous financial organizations, including the Investment Management Consultants Association (IMCA), Allstate Insurance, Societe Generale Group and the American Society of Pension Professionals and Actuaries. CEO of the Institute for High-Character Leadership, Dr. Weinstein conducts a Forbes online column on the subject.

In annual Gallup surveys asking Americans to rank honesty and ethical standards in a number of professions, “business executives, stockbrokers and insurance salespeople” consistently score near the bottom, according to Weinstein. He maintains that adhering to a fiduciary standard, which in itself is ethical in concept, will make advisors true professionals and as such, generate a more positive consumer perception of them.

Formerly an associate professor at West Virginia University teaching ethics to medical, nursing and dental students, Weinstein has helped firms hire and promote employees with high ethics for more than a decade now.

His most recent book, “The Good Ones: Ten Crucial Qualities of High-Character Employees” (New World Library 2015), examines the components of high character and why people with it achieve high-quality outcomes.

ThinkAdvisor recently interviewed Weinstein, on the phone from his New York City office. The ethics authority, hired as a speaker by more than 300 organizations and groups including the National Football League and the military, discussed the 10 critical qualities of high character and how sticking to an impeccable code of ethics can help FAs prosper.

Here are excerpts from our conversation:

THINKADVISOR: Why should an advisor welcome the fiduciary standard rule?

BRUCE WEINSTEIN: The root of the word, “fiduciary,” means trust. The heart of the rule is an ethical concept, an attempt to bring financial advising into line with all the other professions.

A profession is an [occupation] in which everything is meant to advance the client’s interest. If advisors really want to be known as professionals, they’ll [conform to] what all other professions do by putting the client at the center of everything.

But hasn’t ethics always been important in financial advising?

With the fiduciary rule, it’s especially important. Advisors will see that it’s not only ethical but, if they take a long-range point of view, in their [financial] interest.

Do people think that most financial advisors are ethical?

Every year Gallup surveys Americans to rank the ethical standards of the professions. Pulling up the bottom half year after year [include] business executives, stockbrokers and insurance salespeople. The only group with lower ratings in terms of trustworthiness are car salespeople and members of Congress.

Some financial services groups and firms are still opposing the fiduciary rule.

That’s a mistake because in the long run, their businesses will prosper when they put the client at the front and center of everything.

A House bill to overturn the rule was recently introduced. Your thoughts?

That makes no sense. If there were a conflict about doing the right thing and prospering financially, I could understand. But there’s no conflict.

If an advisor asks himself or herself, “What’s the best thing I can do to benefit myself and my firm?” the answer would be the higher character choice of making the client the center of all that they do.

But many advisors feel they were succeeding without the rule and don’t want it.

When I started giving speeches in ethics around the world, people wanted to know, “What’s in it for me?” That’s an easy question to answer if you take a long-term view: The high-character course of action is the profitable one.

Advisors who work on commission are upset about the rule.

Why not avoid even the perception of impropriety by not having any financial gain [attached to] your recommendation? That makes it pure and generates respect for the advisor.

The BICE [best interest contract exemption] says that as long as you disclose a conflict of interest to the client, you’re in the clear legally. But when you’ve got skin in the game, it risks clouding your judgment.

So what could be the upshot of that?

If a client gets even a whiff that an advisor may not be making a recommendation in their best interest, do you think they won’t tell their wide circle of friends and associates?

Conversely, it seems that good ethics brings good referrals.

Right. The surest way to generate great buzz is by offering a great product or service with the client in mind because then the client will do the advertising for you. This feeds into the nature of word of mouth.

With the internet, word of mouth is even more powerful nowadays, I suppose.

If you get badmouthed on the Internet, it’s there forever. But so is good word of mouth.

A cottage industry is developing to help people erase their digital footprint, but that can never be done completely. There’s an electronic paper trail now where you can find out what people are saying about you — good, bad or indifferent.

In your book, “The Good Ones: Ten Crucial Qualities of High-Character Employees,” you write: “Falsehood in all its forms is a poison to an honest person.” The 10 qualities you cite are: Honesty, Accountability, Care, Courage, Fairness, Gratitude, Humility, Loyalty, Patience and Presence. What are the must-have qualities for advisors?

Honesty and accountability.

Accountability means doing four things consistently: Keeping promises, considering the consequences of your actions, taking responsibility for your mistakes and making amends for those mistakes.

What sorts of mistakes?

Let’s say an advisor really believes a certain investment would be in my best interest, but it turns out not to be. The advisor needs to take responsibility for that and make it right: Find a better product for me.

When a physician tells patients, “I made a mistake,” they are less likely to sue than if the doctor ignores them or tries to cover up the mistake.

“Presence” is a crucial quality, you say. How does that apply to advisors?

They need to be fully in the moment, to be there for the client and focused only on advancing his or her interest.

This is more important than ever, given the fact that there’s so much anxiety and even anger associated with the fiduciary rule among a certain population of advisors.

You write that being ethical helps defuse emotional behavior. How so?

There’s probably no other realm of our lives as fraught with emotion as money. When the stakes are high, our emotions can get in the way of thinking calmly and making the best choices. That applies to both advisor and client.

The only area where the stakes could be higher is health care. A client-centered advisory relationship lowers the stakes in the best possible sense.

How?

Because you don’t have to worry about making a choice that might either help or hurt you financially as an advisor. When the client is at the heart of what you do, you’re more likely to prosper.

Advisors’ heavy use of jargon can make the difference between keeping a client or seeing them split. But why shouldn’t advisors use jargon? It’s the shorthand of investing.

Coming from a philosophy background, I was appalled by how often philosophers use 25-cent words when a five-cent word will do. When financial advisors use jargon, they lose opportunities.

If I sat down with an advisor who was spouting jargon, I’d say, “Thank you for your time” — because I don’t understand these instruments and products.

But nothing is so complicated that [an FA] can’t break it down in language that a third-grader can grasp. Even nuclear physics or neurosurgery can be explained in very basic terms.

How can advisors be sure that clients understand what could happen to a certain investment on the downside?

They should explain it and then ask the client to repeat what they just told them. If what the advisor hears isn’t what they said [in words or concept], they didn’t get through well enough.

How ethical is it for an advisor to tell clients, ”This investment would be good for you; I’m recommending it to many of my clients”?

It’s a subtle form of pressure. The subtext is: If you don’t choose this, you’re out of the loop — you’re not with all the other people who are smart.

It’s another thing if the client asks, “How many clients are choosing this product?” and the advisor answers, “It’s very popular now.”

Short of that, it seems there’s some undue influence being exerted.

Are there ethical issues when clients use robo-advisors to invest?

For something as important as your money, why would you trust any of it to a machine?

This is where, more than any other area of your life, you want a person of high character focused on your interest.

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How DOL fiduciary rule can boost advisors&rsquo; profits: The Ethics Guy

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