Last month, I discussed how due diligence went past due in our business … with devastating results. This month, I'd like to talk about the resurgence of due diligence–and what it all means.
Clearly, the lack of due diligence has affected your clients both objectively and subjectively. Objectively, many have lost tremendous wealth due to the economic meltdown that resulted in part from bad due diligence. Subjectively, Wall Street incompetence, greed and malfeasance has transformed client good will and trust into worthless derivatives.
Some clients have become so cautious as a result that their money is now weighed down with a heavy anchor of fear. They're unable to make important financial decisions or allocate funds for new investments. If paralysis continues after the market hits bottom, it may well hurt their long-term financial prospects.
Another implication: Clients are embracing the President Reagan-inspired maxim "trust, but verify." They're putting advisor backgrounds under a steely-eyed microscope, using FINRA's BrokerCheck service, and calling insurance and securities departments themselves. Many also rely on the National Ethics Bureau to do their legwork.
