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PROTECTING YOUR PRACTICE

NOTHING HIDES SIN like a bull market.

When stock prices are soaring, the last thing on most clients’ minds is regulation violations. In a prolonged bear market, however, even your favorite clients may be phoning you from their attorneys’ office.

When I first started in the business, my mentor taught me to do certain things that were actually felonies. He was not trying to make me a criminal. He was just handing on to me the same overzealous sales practices that had made him a lot of money. In the years since then, the field has become so competitive and complex that even experienced financial professionals will find new things in this book to improve their practice and keep them out of trouble.

The first step in building a successful practice is knowing what business you are in. Forty years ago, proprietors of drive-in restaurants thought they were in the hamburger business. McDonald’s Corp. founder Ray Kroc understood something his competition did not: he was really in the speed and clean-restroom business. That knowledge made him a billionaire.

You need to know what kind of business you are in. What is really motivating clients to seek your advice?

Believe it or not, we are in the peace-of-mind business. Whenever I lecture on choosing an adviser, an investment, or even a broker-dealer, I counsel the audience to first look at the character of the people at the top. If people of good character are running the operation, they will work hard to save even the worst deal. On the other hand, leaders with poor character at the helm can destroy even the best deal.

Character is critical. Trusting a financial adviser to behave ethically when no one is looking is the single most important factor on a consumer’s mind. Clients are begging for someone they can trust. We can build that good faith and reliance by showing them that our integrity is beyond reproach.

I believe in doing what is right by the client. I believe this not just to appease regulators and avoid lawsuits but also because it builds business.

This book is about the “how” of doing the right thing.

K. V .