The Scholarly Financial Planner: Observations: Transforming the Firm from a Sales Culture to a Fiduciary Culture

Ron Rhoades of The Scholarly Financial Planner discusses the signs of an implemented fiduciary culture throughout a firm.

Excerpt: Twice a semester I take a group of students in a 15-passenger van on visits to local financial services firms. My financial planning program (undergraduate) students benefit from exposure to different practice models, learn about “day-in-the-life” of a financial advisor, and some even make connections leading to future internships or jobs. They obtain a real picture of the environments they may join, and upon their return most become more committed to their studies and to joining this emerging profession.

Yesterday I undertook another of these trips, visiting four different firms over the course of six hours. Of interest to me was the apparent transformation of two of these firms from commission-based sales to fee-based businesses over the past few years. Both firms indicated that a primary motivation was to secure recurring revenue. And both firms stressed improved relations with clients.

In one firm I got the real sense that the fiduciary culture was being implemented throughout the firm, from the top down. The firm had long utilized the platform of an independent BD firm, and they had sold a variety of insurance products. Yet, several years ago they formed an RIA firm, owned by the principals of the firm, and began to transition their clients to it.

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