Several weeks ago we invited partners of a prestigious accounting firm to visit our office. We shared a couple of clients with this firm and we were very impressed with them. We were hopeful that we could establish a mutually beneficial relationship between our firms. The primary purpose of this meeting was for our shareholders (six of our eight shareholders were present) and their partners to meet each other, and for us to review our processes for financial life planning and investment management. We created a PowerPoint presentation and several of our shareholders participated in the discussion. They told us that they were very impressed by the thoroughness of our discovery process and how we match our clients' investments to their goals. We felt good about our meeting and we agreed to visit their firm in the near future.
Later that same day, one of the partners called to inform us that they would be very open to referring some of their clients to us. He told us that, while they were pleased with our systems, their decisions about which firms they refer business to is based more on the "intangibles." He told us that it was obvious to all of them that "every shareholder in that room had one thing in common-character and genuine caring about their clients." He went on to tell us that many firms have great systems, but without these intangibles a positive client experience could not be guaranteed.
That got us to thinking-what is it about what we do that attracts and retains clients? While we pride ourselves on our financial planning process, is that the most important factor in their decision to hire and retain our firm? Or is it, as the accountants suggested, the intangibles? I think we can all agree that potential and existing clients want a firm that has the character and integrity to always put their interests first.
Competence, of course, is critical but without integrity it could result in catastrophic experiences for clients, as we have seen from some of the recent scandals. As a matter of fact, it is probably more important now than it ever was. The paradox is that, while we know how important it is, is it enough to simply tell our potential clients that we are trustworthy? Is there anyone who says that they are not? However, it is detectable. We did not tell the accountants we value the intangibles, but they came away from that meeting knowing that we do. To paraphrase, someone once said, "Who you are speaks so loudly that I can't hear what you say you are."
Mark Putnam, the president of Character Training International, wrote, "Your character is shaped and molded by your everyday choices. Thoughts, words, actions and habits are all pieces building upon each other. So, watch your thoughts; they become words. Watch your words; they become actions. Watch your actions; they become habits. Watch your habits; they become character. Watch your character; it becomes your destiny." The Josephson Institute lists the six pillars of character as: trustworthiness, caring, respect, responsibility, fairness and citizenship.
At our firm, we have core values with which we live our business lives. Someone once defined a core value as something you would continue to do even if it became illegal. It was his way of pointing out that one does not take core values lightly. When we defined what these values were in our firm, every person in the firm participated anonymously and we did not settle on our core values until there was total consensus (more about this process in a future article). These values are displayed in our lobby. I'm sure the accountants read them when they visited our office. However, it is our responsibility to make sure that every one of us is living up to them in everything we do and say in our firm. We expect everyone with whom we come in contact to hold us accountable.
Our core values are:
Clients' interests always come first. Of course, this is our fiduciary duty, but it is much more than a legal responsibility. It is the knowledge that nothing we do that will benefit us more than it benefits the client will be done. In every decision that may result in a conflict, we always err on the side of the client.
Integrity and honesty. It has been said that integrity is measured by what we do and say when no one else is looking. And at our firm, someone is always looking. If one of our associates were to say or do anything that was out of integrity, someone in the firm would know and do something about it. Of course, this is hypothetical because to my knowledge it has never happened.
Stewardship. Merriam-Webster defines stewardship as "the conducting, supervising, managing of something; especially: the careful and responsible management of something entrusted to one's care." Our clients depend on us for their financial future, and our employees for their livelihoods. We must be dedicated stewards for those who have placed their trust in us.
Competence and continuing education. While continuing education is a requirement to maintain our CFP designations, we believe that everyone in our firm (including administrative employees) needs to continue their educations. We budget for these expenses because we know how important it is for everyone in our firm to be competent in what they do. We also do not offer advice in areas where we are not competent. That is embodied in the CFP Code of Ethics, but we have encountered some advisors who are embarrassed to simply say, "I am not competent to give that advice but can refer you to someone who is."
Treating everyone with dignity and respect. This includes our clients, employees, vendors and everyone with whom people in our firm come in contact. We have had some occasions (thankfully rare) where clients have treated our employees disrespectfully. We call this to their attention and ask them to be more respectful. In one or two occasions, they chose not to because they felt that it was their right since they were paying us a fee. When that happens, we ask the client to find another advisor. If it's a core value, and it is, we need to adhere to it even if it means the loss of revenue.
Having fun. We believe that life is too short to be serious all the time. We truly enjoy being around each other and we find ways to laugh and have fun. Turnover in our firm is extremely rare and we try to make the atmosphere as enjoyable as possible. We encourage everyone to occasionally let their child out to play.
Most of the education we receive is about technical competence, as it should be. However, we must also be aware of the intangibles. As Albert Einstein once wrote, "Most people say that it is the intellect which makes a great scientist. They are wrong; it is character."