What Makes a Great Financial Advisor?

I have a one-word answer to that question: An advisor must be trustworthy.

The Dodd-Frank Act, passed two years ago this July, was intended to increase the integrity of the financial services industry. Yet, in the last few months, we’ve read about J.P. Morgan’s $6 billion loss as a result of the “London Whale” trades, The New York Times’ expose on J.P. Morgan’s campaign to push high-priced proprietary products, and Barclays’ problem with their manipulation of LIBOR. Given these recent events, it didn’t surprise me to read an article on AdvisorOne that reported that the law firm Labaton Sucharow’s survey of 500 senior executives in the United States and England found that 24% of the respondents believe financial services professionals need to engage in unethical or illegal conduct in order to be successful.

So, with so much distrust, how do you find an advisor you can trust? Working with an advisor you can trust begins with finding a fiduciary, someone like me, who always puts your needs first. In my mind, serving as a fiduciary means possessing and upholding six core characteristics—the “Six Cs” – which I’ll cover individually in future posts.

My first C is Character. An advisor with character acts with complete integrity, loyalty, and transparency and avoids all conflicts of interest to put you first in all situations. An advisor with character provides objective guidance and sits on the same side of the table as his clients, 100% committed to putting their interests first. Character is the most essential relationship building block. It serves as the foundation on which we build a trusting bond that serves as foundation of a productive and collaborative relationship.

As Theodore Roosevelt said, “In the long run, character is the decisive factor in the life of an individual and of nations alike.”And, as the debate over regulating a universal fiduciary standard continues, the observation of Alan Greenspan, past chairman of the U.S. Federal Reserve Board, holds particular weight, “But rules cannot substitute for character.”

(Note:  You can read the a summary of the other "Six Cs" in our August 2012 article on our website.)