Thirty-some years since I first became registered to work with securities, we have been doing business with some people for decades. Some of those, I knew before that—friends, people I admire. I disappointed at least one of those recently. I hate that it happened and I am sorry.
This essay is an attempt to minimize the chance of this happening again. Let me explain.
For many years, my practice included aspects that were like a debating society. I would propose the purchase or sale of an investment to a client, we would discuss it back and forth, and the client would make a decision to take action, or not. This is the old brokerage model of investing.
In recent years, there has been a lot less time for debate as more and more people have engaged me to manage investments as their fiduciary advisor. (This is in my capacity as an investment advisor representative of LPL Financial, a registered investment advisor.) The advisors of Leibman Financial Services collectively serve more than 200 accounts with over $50 million assets through LPL Financial, and the majority of our time needs to be devoted there.
The issue is that these investment advisory accounts hold us to a higher standard. We have all the obligations of the old brokerage arrangements, plus we are obligated to put your best interests first, monitor the investments and your situation over time, and manage everything to stay in line with your investment objective. We manage these accounts without prior debate before we take action to pursue your best interests.
The error I made was assuming a client was not suitable for the investment advisory arrangement. I did not think he would give me discretion to manage his account without debate. But I failed to do him the honor of describing it to him, and letting him make the decision. He was disappointed that he had not heard about the alternative sooner, when the subject came up. I had met our legal obligations, but not the higher standard to which we hold ourselves.
If you are a client with products at an insurance company or investment company outside of LPL, or pay commissions on brokerage transactions inside an LPL Financial account, our relationship is on the brokerage account model. There is nothing wrong with it if those products and that relationship addresses your needs. We are always happy to discuss your holdings and your situation—email us, or call.
If you wonder whether an advisory account might be right for you, please email us, or call. We want you to know the situation, and make an informed decision about the kind of relationship you would like to have going forward. We also need to assess whether we have a good fit with you philosophically—a requirement.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
All investing involves risk including loss of principal. No strategy assures success or protects against loss.