Strategy
Advizent Urges Advisors: Adopt Even Higher Standards To Stand Out

Advizent, a membership organization for independent financial advisors, is urging advisors to voluntarily raise the bar on standards of client care.
In a blog on the organization’s website, founders Charles Goldman and Steven Lockshin say that advisors “can and should do more to distinguish themselves” beyond the principles of the Adviser Act of 1940.
Advisors regulated by the Act are required to put their clients’ interests ahead of their own and this “principles-based” approach has been “the gold standard of fiduciary care,” say Goldman and Lockshin.
However, the duo say advisors could better serve their clients by adopting more rigorous standards, and this would, in turn, better differentiate the independent advice industry from other financial advice providers.
For instance, rather than disclosing conflicts of interest over pay, advisors should seek to eliminate them altogether. Essentially, the gold standard of fiduciary care should move toward eliminating rather than disclosing any potential conflicts of interest, they say.
They point out that potential conflicts - like taking revenue share from asset managers, or different commission levels for similar products, or any payment from a product manufacturer to "sell" their specific product - could confuse consumers.
"Even though some advisors are disclosing potential conflicts and are committed to putting the client first, it doesn't change the fact that there may be embedded conflicts in the business model and compensation structure," says Goldman. "It's very hard for the consumer to know whether or not you are, in fact, conflicted. So why not just get rid of as many conflicts as possible right from the start?"
Stick to principles
However, while Advizent is pushing for higher standards for advisors, it says regulation should remain based on principles, not rules.
"The essence of the consumer proposition is very straightforward - you put the client first, always," says Lockshin. "It is based on accepted common law and decades of successful implementation. If anything, advisors should be looking toward broader and more rigorous application of this basic principle, rather than narrowing it and replacing it with a Byzantine system of rules."