Acting in a fiduciary capacity carries the responsibility of always attempting to do the right thing on behalf of your client.
We’ve written often about fiduciary capacity and the level of fiduciary care at Mullooly Asset Management. And serving as a fiduciary has been written about right here on this website as well.
We’ve discussed, that as a fiduciary, we always need to act in the client’s best interests. Often times, discussions with clients (and potential clients) revolve around exercising great care to find the most efficient investments for our clients. Sometimes acting as a fiduciary means finding a low-cost alternative. Or sometimes that means finding the right match for a client’s portfolio. And many times, it’s not a decision between “right and wrong,” but between “better and best.”
But there’s another side of acting in a fiduciary capacity that isn’t often discussed. It’s not even frequently mentioned, even among peers.
Sometimes, acting in a fiduciary capacity means telling someone they’re wrong, or letting them know they are on a destructive path. And then showing them a new way forward.
From time to time, as a stockbroker, one of the “hard things” I needed to do was call folks when they had a margin call. And letting them know they needed to get additional funds in their account today, or their account would essentially be closed.
These were calls I never wanted to make. But they were problems that needed to be tackled NOW.
Sometimes we have conversations with folks who want to take on excessive risk with their investments. They may not even realize what they’re exposing themselves to. Or, sometimes, we have the conversation in the reverse. Some folks want zero risk for the present time. “I want to sit this out” or “I want to go to the sidelines for a while.”
Have they thought through the repercussions of these actions they would prefer to take today? And have they considered what that might mean for them in the future?
Fiduciary Capacity Means Having Hard Conversations
These are hard conversations. These are hard points most people want to ignore. Topics many folks would shy away from. We live in a “people-pleaser” world today, where no one wants to be “Debbie Downer” or “Negative Nancy.”
As a result, the “hard thing” doesn’t get done until the last possible moment, or not at all. Avoiding potential issues simply seems easier. So many people prefer to put off tackling problems for as long as possible.
But these “hard things” need to get done.
Tackling problems, and doing the hard work comes with a certain level of maturity, and it comes with acting in a fiduciary capacity. Deep down, you know you will better after “swallowing that frog.”
It’s an unpleasant job. Still has to be done.
Not long ago, we met with two partners of a local business. As the conversation went on, we peppered them with several financial questions, over and over. They didn’t have answers. One of the partners was growing flustered and exclaimed, “why do you keep asking us questions we don’t have answers for?”
The other partner leaned over and quietly said, “this is WHY we are working with them. Because they ask the hard questions.”
Last night I watched the movie version of “To Kill A Mockingbird,” with Gregory Peck. This was probably Peck at the peak of his acting career (1962). But the screenplay had to find a way to take all the little nuances of Harper Lee’s novel and turn it into just a 128 minute film. There were so many gems that were left on the cutting room floor.
In the story, Maudie Atkinson is the neighbor to the Finch family. In the midst of the fallout after a difficult trial, Maudie (played by Rosemary Murphy) tells young Jem, “I don’t know if it will help saying this to you… some men in this world are born to do our unpleasant jobs for us. Your father is one of them.”
Hearing that line from the character made me think about some of “the difficult things” or “unpleasant jobs” we need to tackle in our day-to-day. In often overlooked ways, doing our unpleasant jobs is the essence of acting in a fiduciary capacity.