Client Voices

Envestnet’s Judson Bergman Outlines The Fiduciary Opportunity in Investment News

Judson Bergman, Founder, Chairman and Chief Executive of Envestnet, authored an op-ed for the July 2010 issue of Investment News pointing out the business opportunity for financial advisors who adopt the fiduciary standard of client service.

Bergman’s piece was based on research recently conducted by Envestnet discovering that even though a majority of investors support regulation holding all advisors to the same standard of client service, most think that fiduciary responsibility cannot be regulated— that “you must rely on the advisor’s individual integrity”.

To better understand people’s understanding of and attitudes towards the fiduciary standard, Envestnet commissioned national surveys among both professional financial advisors and investors on the issue. The release of the research coincided with the passage of financial reform legislation which has raised general public’s awareness of issues surrounding the fiduciary standard.

“Fundamentally, investors think that the character of the day-to-day interaction between advisor and client carries far more weight than any regulation in encouraging confidence and trust,” said Bergman. “Every advisor can act on that, no matter what their regulatory context.”

However, the survey found that most advisors haven't developed or discussed with clients any such “code of conduct” beyond what a fiduciary standard requires. Relatively few advised investors said their advisor has ever formally explained their fiduciary responsibility to them.

Moreover, about three-quarters of advised investors said that they would have more confidence in an advisor who offered a statement of their commitment to clients specifying how the adviser worked. Investors also wanted more-transparent communications about fees and compensation.

“Clients are telling us, in no uncertain terms, how it [trust] can be strengthened. And there is no reason to wait for the SEC to set the terms of engagement,” said Bergman. “Every advisor and firm has a chance to reinforce loyalty and build business by resetting the client conversation and advisory process to signal strongly, at every turn, an unshakable commitment to every client's best interests.”

To read the full article, click here.

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