Major League Baseball has been rocked by a cheating scandal. The Houston Astros illegally filmed opposing teams to steal signs and gain an unfair advantage throughout their 2017 World Series championship season. They were fined $5 million, lost two draft picks, several people were fired, and their World Series victory will be forever tainted.
Many clients may not have much understanding of how investing works. (That's why we're here!) Like the Astros, they might be tempted to game the system and risk their financial life goals to chase easy money from a hot investing trend. (Think of the conversations you had with your clients about Bitcoin back when its value surged to nearly $20,000.)
The sordid story of the Astros’ elaborate use of illegal schemes is a useful client conversation starter for topics of integrity and a disciplined approach to a financial plan. No one is perfect: Everyone will, at some point, be tempted by what appear to be fast lanes to their money goals. Here are ways to turn this scandal into an object lesson to keep your clients on track:
- The importance of Identity protection. The Astros essentially knew how to steal information, just as thieves know how to steal clients’ and rob you blind. People need to know how to protect their finances and related information, just as other teams need to know how to protect themselves from illegal tactics opponents might use to know what pitch is coming next. Some of the safeguards are as basic as knowing how you’ll communicate with them, so they can spot a fake email or voicemail masquerading as one from you. They should know, for example, that you’ll never email them and request that they verify their Social Security number.
- Not everyone plays fair in baseball ... and finance. Everyone who competed against the Astros thought they were on the same playing field, which wasn’t true at all. This is the same in the financial industry. People play by different rules according to their experience level, the designations they hold and especially in how they receive compensation. You need to be fully transparent about how you’re compensated. If you’re a fiduciary, your clients need to understand how that benefits them. A client who’s informed and aware is more likely to be loyal and also to refer others.
- Look for good teammates. Good teammates don’t help each other cheat. They support each other. And good financial advisors work the same way with their clients. We’re there to support our clients and to help them progress in their financial lives. We’ve all made financial blunders over the years. We’re not here to judge. We’re here to be partners in establishing and meeting financial goals. Your clients should choose to join your team because they know you share the same goals, that you’ll be a good teammate and that you have their best interests at heart.
- You can’t cheat your way to success. For your clients, "get rich quick" is the equivalent of cheating. Unfortunately, your clients are bombarded by advertising that touts "the next Amazon" or some other investment that all but promises a 500% return, a 1,000% return or some other eye-popping number. Believe me, if that "sure thing" existed, we’d all put every penny we had in it, quadruple our money and be retired in 12 months. It’s our job to educate our clients, not just to manage their expectations but also to help them understand that reaching long-term goals requires long-term thinking.
As this is written, the baseball season is about to begin. No matter who wins, let’s hope they do so with honesty and integrity, the way we treat our clients every day.
Brent Weiss, CFP, is the chief evangelist at Facet Wealth. He also played baseball for the University of Notre Dame.