Transparency

I like to be fully transparent with my clients. I encourage them to ask me hard questions, and I’m committed to answering them truthfully.

For example, is it a positive or a negative that I am the only financial planner in my business? Well, the answer is both, and I’m happy to talk through both sides of this.

Another example is conflict of interest. I talk to clients often about this. Some advisors have a lot, but I’m proud that I have very few. Recently I was talking to a client about paying off some debt. I told them that every advisor, including me, has a conflict with debt recommendations. If a client pays off debt instead of investing their cash, then that is less money for me to manage and therefore bill on. I have an incentive to encourage clients to invest instead of paying off debt. That doesn’t mean I would encourage them to invest, because I want to advise them on what is best for them. But, I like to start the discussion by acknowledging the conflict, and then discuss the pros and cons of each decision.

You may recall that my company was recently visited by auditors from the Texas State Securities Board for a routine audit. Actually it wasn’t that recent. They came to my office for their on-site visit on November 6th. You can read my blog post about their visit here!

Now I was under the impression that this would be a quick 3-week project. However, I guess life gets busy for auditors too, and I didn’t hear anything until just recently. The auditors asked for a little more information, and then issued their final report last week.

So in the spirit of transparency, I thought it is fitting to share the audit results here. 

Audit Report Findings

The report is basically asking me to take two corrective actions.

1. Add a section to my internal Compliance Manual that states who will review and approve which advisors in my company are allowed to use which credentials. This is sneaky, and I thought it was interesting that the auditor asked me for my business card when he was here. Now I know he was looking to see if I advertise my CPA and CFPⓇ licenses, and if I have a procedure for how that process went. So my new procedure sounds something like this: If any staff of the firm (which is currently only me) wish to obtain or use a professional designation, they must first have that reviewed and approved by the Chief Compliance Officer (also me!). I’m a tough reviewer, so I hope this doesn’t cause any problems!
2. Create a policy on the process I will take if I suspect that any of my “senior” clients are being exploited by another person. I love seniors, and it makes my blood boil that some people prey on them for their own financial gain. I’m guessing my policy can’t say that I will track down the culprit, take them to a back alley, and beat them with a hose. So I’ll create a standard policy. Also, I don’t really know when you turn from being an active empty-nester to a senior, but I count all of my clients still in the non-senior category.

Now, you may remember, I was an auditor for 7 years. I generally worked on anywhere from 3-6 audits per year, so I’ve conducted a lot of audits! In all of those audits, I never had one with zero findings. So I expected the auditors to have some recommendations. And really I welcome these. I want to have everything in perfect order, and the best way to double check that is to have auditors review your business.

I’m also proud that these were the only two findings after combing through my entire business!

So in full disclosure, I’m not perfect. But I’m open to feedback, and I’m committed to improving myself and the business every day!