Last week, David and I attended the eighth annual Institute of Advance Financial Planners (IAFP) Symposium in Banff. The Symposium was appropriately titled “View from the Summit” as the sights of the Rockies were jaw dropping.  (Note: The IAFP is responsible for the Registered Financial Planner (RFP) professional designation that is considered the highest standard in the competency of financial planning.)

Preston Manning was tasked with setting the tone for the conference. His opening address focused on “Ethical Lighthouses” and he left the attendees with 4 key takeaways. I’d like to introduce his first message and talk about the rest in subsequent blogs.

Fresh out of university, Mr. Manning landed his first consulting opportunity. The gentleman who hired him was looking at purchasing a car crusher and wondered if it made sense. So, Mr. Manning started the due diligence - he checked on the crushable car supply pipeline, asked the steel plants the going price for the heaps of steel, travelled around to visit other car crushers and then he ran the numbers. The numbers said NO, but the gentleman had his heart set on a crusher and bought it anyway without giving any more work to Mr. Manning. Subsequently, Mr. Manning moved to politics and rather than “tell them what they need to hear, he told them what they wanted to hear.”

So what about financial planners?  Should they be business consultants or politicians?

Before addressing that, I should say that David and I appreciated how experienced the RFP’s are, how transparent they are in charging their clients and the fact that they aren’t afraid to say ‘I don’t know’ and ‘it depends’.  Overall, we got the sense that RFP’s really are trying to do what’s right for the client.   

As to the question, there is no doubt in Mr. Manning’s mind that “a long-run relationship is better served if you tell people what they need to hear.”

But it isn’t always easy.

We are living this situation right now at Steadyhand. We have one of the best Income Funds in the country and could be shouting from the rooftop about the great returns.  However, our clients need to know that the opportunities that produced the great recent returns aren’t there anymore. So while we still think the fund is one of the best in the country, our clients need to be thinking in terms of 4-5% going forward.

Next blog I’ll talk about Manning’s three words he recommends asking as an ethical test before communicating- “is it true?”