Righting the Ship (Part 2)

What should investors expect?

When investors are buying financial products and services, their cash is paying the bills and salaries of the professionals and institutions that they’re working with. So how should they be treated?

One expectation they should have is that their interests should come first, before that of the finance professionals or the companies they’re working with. That is, the investor’s welfare should be considered before the professional’s. This seems obvious, but this implies, for example, that investors need to know how the people working for them are getting paid. Are they earning commissions, or on a salary? Do the commissions get paid all at once, or are the spread out? If there are other fees, what is the basis for those fees? And are there any potential conflicts?

Investors have a right to ask these questions, because everyone has “skin in the game” one way or another. People can hope that other folks will do the right thing, but they need to know whether they’re getting paid to do the right thing. And when investors’ interests and professionals’ interests diverge, they need to know that, too.

It’s by being open and honest with their clients that professionals can earn their trust. And without trust, there can be no business.

Douglas R. Tengdin, CFA

Chief Investment Officer

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