Why Working with a CFA Charterholder Matters

By Michal Emory on May 31, 2017

Trust. It is a simple word, but has such a powerful meaning.  It is a word that is on my mind all the time. Frankly, the financial services industry, as a whole, has not done a great job at earning and keeping the trust of the public. Every time there is a news story like a Bernie Madoff, or when you are sitting with an advisor who is trying to sell you some product which, for some unknown reason, makes the hair on the back of your neck stand up, this distrust is magnified.

As a CFA Charterholder, I just returned from the CFA Institute Annual Conference. The conference brings in many top market and thought leaders with the goal of answering two questions:

  • One, how can we add more value to what we bring to our clients?
  • Two, how can we be leaders in the financial services industry and create positive change in how the industry conducts business?

Session after session dealt with different aspects of how to provide higher levels of service to our clients and how to build better portfolios for our clients.

The CFA Institute prides itself on having the highest ethical standards. At the center of it is the Asset Manager Code. I have included a link at the bottom if you want to read it. This Code outlines the standards that, as a CFA Charterholder, I hold myself to and to which everyone at The Trust Company holds themselves.

Essentially, this Code is a professional Golden Rule. While we would all like these standards to be commonplace, I have seen too many other statements where, upon reflection, it was clear there was only one person the advisor was looking out for (hint: not the client).

So, why should this matter to you? It matters because you can take comfort in the fact that when we build your portfolio we do so with one question in mind: how does this portfolio best help you reach your financial goals? It matters because since we do not sell products, receive commissions, or sell mutual funds with loads, we are free to find the best investment products for you.

You never have to ask yourself the question, do they believe in these investments or are they just trying to make a commission? That is one of the things I love most about our simple fee structure. It puts us on the same side of the table with you and enables us to find the best portfolio for you, free of any conflicts of interest. 

Next time a financial professional  is trying to sell you something, ask a simple question.  “How are you getting paid through this?” While it is not a difficult question, it can be an uncomfortable one, and it is crucial to the very first word of this article: trust. We all know that everyone has to be paid for their services. What is not okay is for someone to be paid in a way that disadvantages the client. Take mutual funds with front-end loads as an example.

What is a front-end load?  It is a commission paid to the advisor that is taken out of your investment.  For example, if you invest $10,000 in the American Funds Growth Fund of America (which has a front-end load of 5.75%), then $575 gets paid to the advisor and you are only left with $9,425 to invest. This means that your investment needs to grow 6.1% over the next year just to get back to $10,000. 

Michal Emory
Who does this structure benefit?  I will let you be the judge. But know that the investment performance of those front-end load funds is not being helped by that charge.

At The Trust Company, what matters to us are your goals. We look at ourselves as your partner and friend on this financial journey. And as a CFA Charterholder, I commit to you that every action my colleagues or I take is an effort to get you closer to your financial goals, in a way that is free of any conflicts of interests or concerns of ulterior motives.

Your success is our continual motivation. That is why working with a CFA Charterholder matters.

Here is the link to the CFA Institute's Asset Manager Code that I mentioned earlier in the article:

https://www.cfainstitute.org/ethics/Documents/amc_outreach_flyer.pdf

 

Michal Emory, CFA, is Vice President & Chief Investment Officer of The Trust Company.