New investment and savings products, some very complex, come out all the time. Advisors who don’t stay current about the best products for their clients are in danger of violating their fiduciary duties. Yet how can conscientious advisors keep up-to-date about all appropriate products and options, given the rapid pace of industry innovation and ingenuity?

“You can always count on the Wall Street marketing machine to come up with new—often expensive—products to scratch any little itch among savers and investors,” quipped Matt Radgowski, CEO of Halo Investing in Chicago. Some of these new products are actually useful, he acknowledged, but “the proliferation of so many nuanced funds and strategies, some not even publicly traded, makes it tough on advisors.”

That’s because today’s advisors wear many hats, he said, from retirement planning to investment management to client handholding and everything in between. “They are busy enough staying on top of the latest happenings in the financial planning world and what could be coming down the pike from our friends on Capitol Hill [that] learning the ins and outs of Wall Street’s latest flashy financial products is often simply not possible,” he said.

Zoe Brunson, chief investment strategist at AssetMark in Clayton, Calif., put it this way: “Given the complexities and rapid introduction of new products, it is difficult for advisors to be fully aware of all the pros and cons of each offering.”

Take Steps To Ensure You’re Not Behind
Brunson suggested “diligent advisors” take a “proactive approach” to staying abreast—for instance, by engaging in ongoing education through industry seminars and publications (like this one), utilizing technology platforms that can curate investment solutions, networking with other industry professionals to share knowledge, and regularly self-examining to ensure that the products and strategies they recommend are truly optimal for clients.

Radgowski added that it’s often a group effort. “It truly takes a team approach to make sure that all risks are understood,” he said. “With more eyes on the investment-product landscape, the better off the client will be.”

Sheena Pauley of MAI Capital Management in Cleveland recommended having a specialized group “dedicated to research and ongoing due diligence” on investment solutions, not unlike the way firms have compliance officers to make sure current regulations are adhered to. “It is part of our fiduciary responsibility to ensure our advisors are well versed in the current investment options and how they are compliant with current regulations,” she said.

Jim Pratt-Heaney at Coastal Bridge Advisors in Westport, Conn., agreed. “There should be an investment committee who vets all products, to take the load off of the advisors,” he said.

Some experts highlight the advantages of outsourcing—especially for complex products, such as annuities. “There are so many annuities out there that have various nuances, it’s nearly impossible for an advisor to know the fine details of all of them, especially if they are delivering comprehensive financial advice and need to keep up with all aspects of retirement planning, cash flow management, changing tax rules, estate planning, etc.,” said Scott Marquardt of BlueStem Wealth Partners in Litchfield, Minn. “It’s just more than what most people can stay on top of.”

To support its squad of nine advisors, BlueStem partners with an outside firm that specializes in annuities. “We use their expertise and work with them to find the best solutions for our clients,” he said.

Some firms narrow their  focus to particular areas of the market, making it clear to clients that they cannot be all things to all people. “As a discretionary portfolio manager that invests primarily in stocks, bonds, options, ETFs, and mutual funds, its important that I focus my attention to those areas,” said Paul Sarama of the Baker Sarama Wealth Management Group at Steward Partners in Paramus, N.J.

For other types of products, though, he knows he would have to become more knowledgeable or seek outside advice. For example, he said, “if I were to move my clients into structured notes or another complex investment vehicle, it would be my responsibility to become more aware of the pro and cons of that specific investment.”

That’s essential, because there is a danger in becoming too narrowly focused, noted David Lau, CEO of DPL Financial Partners in Louisville, Ky. “Advisors need to be aware of major product advancements in any category, particularly when they are products the advisor often recommends,” he said. “Staying on top of industry trends and developments is a core part of the job, and if you’re not doing it, you aren’t able to provide your clients with the most appropriate advice.”

Be Purposeful
Advisors need to make the effort and be “purposeful” about staying current, he said. “You can’t rely on learning through osmosis,” he said. “You have to actively engage in seeking information and knowledge.”

Joseph Maugeri, managing director of corporate relations for the CFP Board in Washington, D.C., expressed a similar view. “Financial advisors who provide advice on investments need to stay current on new or emerging products, even if they don’t offer those products,” he said. “They need to know how these products affect the client’s asset allocation and volatility.”

For unfamiliar products, he suggested consulting the product provider’s CIO, marketing materials and/or asset disclosures, as well as outside experts. “These sources can prompt advisors to do more due diligence before recommending a product,” he said.

It takes “dedicating time, resources, and a commitment to explore the marketplace,” said David Geibel, president of Girard, a Univest Wealth division in King of Prussia, Pa. “This is easier for larger firms that have dedicated resources for research, [but] even small firms have investment committees or a group that is responsible for investment research and due diligence.”

Advisors at smaller firms shouldn’t despair, he said. There is “a ton of resources for advisor education,” he said, from technology tools to product experts and specialized teams that can review all aspects of financial planning. “I am still shocked at how many advisors have not adopted a program for making sure they are using the cheapest share class, when for years the SEC has announced this is a priority." Such advisors “are then shocked that they must refund money to clients.”

Easier Than Ever
Indeed, gathering information and perspectives on new products is not as difficult as it may sound, said Coastal Bridge’s Pratt-Heaney. “Access to information has expanded significantly within the internet, providing many different resources that were previously unavailable,” he said. “Historically, reliance was placed on wholesalers who were often conflicted. Today, it is easier to understand many more investments.”

Regularly accessible records of due diligence performed on products, and why they passed or failed, can also prove enlightening, he said.

Don’t let the research discourage you or scare you away, he said. “Advisors have to keep an open mind,” he said, “and not simply dismiss an idea because it’s new or different.”