On Topic
TELLING GOOD
CONSULTANTS
A
FROM BAD
s a rule, improvements in technology
democratizes access to goods and services.
That’s a mouthful, so let me give you an
example. When I was growing up, if our
family was planning a trip with flights, we
would speak with a travel agent to arrange flights, hotels,
car rentals and so on. Today, websites like Priceline.com
and Expedia.com have rendered basic travel agent services
obsolete for many customers. Similarly, a generation ago,
individuals and institutions had to rely on brokers or
professional money managers to get access to the capital
markets. If you wanted to invest, you needed the access only
a registered broker could provide. Now, there are a dozen
low cost, efficient stock trading programs which provide
continuous access to global markets with professional grade
tools. Thus, brokers, feeling the pressure, have become
aware that the advice and guidance given is their primary
value proposition, rather than merely access to the markets.
So, the net result is a flood of brokers trying to adopt the
“consultant” mantle in an attempt to preserve their business
or, at least, staunch the bleeding.
22 | WINTER 2014
By Gabriel Potter, AIF®
The practical upshot of is that there are a lot of “consultants”
who are not committed to the highest principles and best
practices of the industry.
So, how can you tell if a consultant is good or bad? Let us
also posit a key factor when searching for a consultant: do
they accept fiduciary status for all their clients? We suggest
that a consultant who acts as exclusively as a fiduciary
bears no relation to the stock X