The Financial Planning Industry is Changing
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Article by
Kendra Erkamaa, CEO & Financial Advisor Triangle Financial Services, Inc.

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“Life is Change, Growth is Optional”

I heard that book title the other day, and even though I haven’t read the book, I found myself considering the title in relation to my profession. As in the case of life itself, there exists a lot of change in the financial world. Our job as financial advisor is to stay informed and help clients navigate their options. However, despite consistent advances in technology and an ever-changing landscape of regulations, we make sure three things remain constant for our clients — our relationship, our collaboration toward growing wealth, and always being a good steward of their money.

A New Fiduciary Standard

A few years ago, there was a Department of Labor (DOL) Fiduciary Ruling in the news that reshaped our industry significantly, proposing that financial advisors act as fiduciaries. Ultimately the DOL Ruling was struck down by the courts, but we adopted many of the recommended standards in our office before the rule was vacated. Because we have always operated in a fiduciary way, the changes we adopted were minor. We started a stronger campaign to align our fees and services for all our clients, and added a few new internal processes.

This past June, the Securities and Exchange Commission (SEC)came out with Regulation Best Interest, which has many of the same concepts. Both rules expressed the same idea – advisors need to put the client’s best interest ahead of any advisor interests. The newer SEC Regulation BI will be fully implemented in the next year.

What is a Fiduciary?

A fiduciary, according to the definition in the Investment Advisors Act of 1940, stipulates a duty of loyalty and care, including putting a client’s interest above the advisor’s interest. Inherently, this can lead to possible conflicts of interest. At Triangle Financial Services, we have always operated with the client’s best interest in mind. With the new legislation, we now have better guidance on how to define the client-advisor relationship and possible conflicts of interest.

The shift to fee-based

Our industry has slowly been moving away from the commission-based model to a fee-based model, and we’ve been slowly changing too. The new paradigm of fee-based may mean you pay an hourly fee for financial advice, or we apply an annual percentage fee to the assets we manage for you. One of the biggest changes you’ll see in the new fee-based model is that you will see exactly how much you are paying for. In the old commission model, the fees were internal to the investments, and it was more difficult to specifically figure out how much you were paying.

With the shift to fee-based, we are able to better define service levels and deliver the appropriate services with a fair fee for services. If you have met with us in the last year, we likely have discussed our new service model and helped recommend a service level to best meet your needs. If you haven’t met with us, watch your mailbox and inbox for more information about our service changes & make sure to schedule an appointment with us next time we reach out for your regular review.

We are excited to modernize our services and continue to grow our Triangle family while providing the compassionate expertise you know and trust.

During the development of our new models, we recognized that our clients have different needs, and have developed additional services to help optimize the services you receive without significantly increasing the fees you pay. We’ve also worked to develop a custom RoboAdvisor service designed to allow for a hands-off investing experience with the security of knowing that your trusted advisors at Triangle are monitoring your investments & available when you do have an advising need. This program is great for younger investors who may not need or want to meet with a financial advisor regularly, but know that in the future we are there for questions.

For most clients, we are recommending consolidating accounts into a fee-based model, with a sliding fee scale based on assets Triangle helps manage. The two biggest changes with this model are applying an annual fee to the account to pay for services, and a clear understanding of the services you are paying for/receiving.

Sometimes, you may need financial advice not included in your service model; or maybe you want to manage your own investments somewhere else and just need a financial plan. For these needs, we have an hourly fee for service where you can pick and choose which services you need. If Triangle manages some of your assets, we offer a discount on these additional services.