April 8, 2024 / by Don Connelly / Investing Wisdom, Managing the Relationship / 0 comments
Here we are again—another presidential election year. If it’s like the last couple of elections, financial advisors are sure to see some clients wringing their hands over which candidate will win the White House and how that will impact the financial markets and their investments. At the very least, you’re likely to get an earful of some clients’ political viewpoints—which is fine if they don’t try to correlate them with how they should invest their money.
For decades, investors have tried to find some correlation between elections and investment performance, hoping it will foretell how a particular outcome will impact their portfolio so they can adjust their investment strategy appropriately.
Of course, if you search far enough, you might be able to uncover data that supports such a link. But you’re not going to find any that decisively shows a causal relationship or enough of one to warrant serious consideration for changing investment strategies based on election results. Still, some clients have such strong political views that they see a connection in all aspects of their lives, including how they invest their money.
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Should FAs Allow Clients’ Political Opinions to Influence Their Investment Decisions?
April 8, 2024 / by Don Connelly / Investing Wisdom, Managing the Relationship / 0 comments
Here we are again—another presidential election year. If it’s like the last couple of elections, financial advisors are sure to see some clients wringing their hands over which candidate will win the White House and how that will impact the financial markets and their investments. At the very least, you’re likely to get an earful of some clients’ political viewpoints—which is fine if they don’t try to correlate them with how they should invest their money.
For decades, investors have tried to find some correlation between elections and investment performance, hoping it will foretell how a particular outcome will impact their portfolio so they can adjust their investment strategy appropriately.
Of course, if you search far enough, you might be able to uncover data that supports such a link. But you’re not going to find any that decisively shows a causal relationship or enough of one to warrant serious consideration for changing investment strategies based on election results. Still, some clients have such strong political views that they see a connection in all aspects of their lives, including how they invest their money.
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5 Scenarios When Advisors Should Fire Clients with Conflict of Interest
December 11, 2023 / by Don Connelly / Best Practices / 0 comments
We’ve posted several times on the topic of conflicts of interest created by financial advisors when their objectivity may be compromised, and their interests are not necessarily aligned with their client’s best interests. We talked about the harm it can cause to the advisory relationship. Financial advisors caught up in ethical dilemmas, whether intentional or not, must be ready to take corrective action to save the relationship and keep the trust of their clients.
But what about when the tables are turned, and the client creates a conflict of interest or ethical dilemma? It happens more than you might think—when a client’s personal interests or values don’t align with their advisor’s. The conflict may not be egregious or illegal, but even if it just rubs you the wrong way, it might be time to cut the client loose.
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The Significance of Ethical Practices in Maintaining Trust and Integrity
August 21, 2023 / by Don Connelly / Managing the Relationship / 0 comments
Most financial advisors consciously try to do the right thing always. However, most people are sometimes prone to error, which is only human. The reality is that advisors, through no fault of their own, sometimes find themselves in situations where conflicts between ethical principles, client interests, and regulatory requirements can create ethical dilemmas.
The challenge for advisors is that they have to overcome a huge trust deficit with clients and prospects. To earn and keep their trust, they must constantly be hyper-aware of their actions and how they may be perceived, whether an ethical breach is intentional or not. That requires having a conscious and deliberate strategy to resolve any potential conflict.
Here are the most common ethical dilemmas faced by financial advisors.
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