Portrait of a Branch Manager; Ins and Outs of Annuity Suitability: July Research—Slideshow

Fiduciary responsibility involves having a particularly high standard of care and loyalty. In the financial advisory field, it is typically understood to boil down to a strict requirement to put a client's interests ahead of one's own. Thus, a fiduciary standard differs from a suitability standard, which obligates the advisor to recommend products suitable for a client but not necessarily the best products regardless of the advisor's fees. Kenneth Silber looks at the historical antecedents and contemporary applications of this headline-grabbing and contentious issue.

The Indispensable Staffer

Late last year, in a study group discussion among LPL Financial advisors in Southern California, brokerage executives asked the advisors to identify what they most needed help with to build their business.

Tops on their wish list: the professional development of staff.

"One of the clear messages was: 'I need help with my staff. What can I do to help them grow?' They want to offload, delegate, encourage staff to take on more responsibility," observes Andy Kalbaugh, the firm's executive vice president of business consulting. "The more productive and efficient the staff, the more productive and efficient the advisor will be."

In response, LPL created AdminU, an educational curriculum to help support staff up their game when it comes to client service, office management, technology, and sales and marketing.  Ellen Uzelac reports that advisors with staff in enrolled in AdminU are already reporting rapid improvements in performance and productivity.

The Financial Advisor as Flight Trainer

A certified flight instructor is the quintessential teacher and one whose very life depends on his teaching acumen. Flying together with pilots-in-training requires nerves of steel because of the very great potential for danger. A novice pilot can put the aircraft into a dangerous altitude quite rapidly, and put his own life and that of his instructor in peril. The instructor needs to make sure that his instruction leaves no margin for that kind of error whatsoever — not the standard that most teachers need to meet. It should therefore be no surprise that I look towards these magnificent men in their flying machines for best practices in teaching and instruction.

Raphael Lapin explains that for financial advisors, as with flight instructors, the key to educating clients is to provide information, concepts and principles in such a way as to enable clients to integrate them, master them and develop confidence in applying them.

Inflated Science

In 1968, the Swedish central bank donated money to the Nobel Foundation to establish a Nobel Prize in economics. It became the sixth category in which the world's most prestigious accolade was awarded, joining physics, chemistry, medicine, literature and peace. Economics, which when the other five prizes were created in the late 19th century had been in its infancy, now was legitimized. Indeed, a solid conceptual framework seemed to have been developed to analyze relationships between economic players and, equally important, to use the laws of economics to forecast the future, formulate policy and create stable and prosperous societies.

All that is now out the window. Recent economic history shows that both academic economists and economic and monetary policymakers do not know the first thing about inflation, which has far-reaching implications for economic science in general.

Alexei Bayer argues that existing economic models do not provide a useful framework for analyzing economic processes and relationships.