Zero Alpha Group Highlights Emerging Trends That Will Help Clear Up Investor Confusion, Mistrust about Definition of Fiduciaries, Investment Advisors.
WASHINGTON and PERTH, Australia, Aug. 20 /PRNewswire-USNewswire/ -- Tougher enforcement and standards for investment advisors acting as fiduciaries will catch on in 2009 in a long-overdue shake-up of the financial planning industry that will deliver major benefits for currently confused and wary investors, according to the members of the Zero Alpha Group (ZAG). ZAG is an international network of independent investment advisory firms -- eight in the U.S. and one in Australia/New Zealand -- managing a total of more than $7 billion in assets.
In order to help further bolster trust among investors, ZAG is urging U.S. and other regulators to send a clear signal by imposing a lifetime ban on investments advisors who fail to meet their fiduciary duties by breaching the trust of clients.
Concerned about often misleading industry practices and the lack of clarity under federal laws and U.S. Securities and Exchange Commission (SEC) rules about the precise meaning of the term "fiduciary," Zero Alpha Group members have been spearheading important efforts to help clear up the current muddle over investment advisors acting as fiduciaries.
Most recently, all nine member firms in the Zero Alpha Group took a major step to promote the concept of a "platinum standard" for fiduciaries by becoming the first network of independent advisory firms in the world to fully embrace the "platinum standard" of certification by the Toronto-based Centre for Fiduciary Excellence (CEFEX) certification. CEFEX is an independent global assessment and certification organization. The challenging "Global Fiduciary Standard of Excellence" is easily the toughest and most demanding recognition of a fiduciary's conformity to ISO-like fiduciary practices and criteria. At present, Plan B is the only investment advisor firm outside of North America to have achieved CEFEX certification.
ZAG members also played a key role this year in the creation and launch of the Investment Fiduciary Leadership Council (IFLC), the international association of investment advisors, investment managers, and investment stewards who have been certified by Centre for Fiduciary Excellence as meeting that organization's highest certification standard.
Additionally, members of the Zero Alpha Group voluntarily adopted in 2007 the "Fiduciary First"(TM) standards, based on the following principles: serve as a provider of quality investment solutions with real value; build investment solutions that are efficient, low cost and risk measured; allow investors to become rate of return "demanders" through the use of index funds and other similar asset class strategies; disclose all relevant information; serve as a client advocate; be independent of all outside commercial or personal influences; and subjugate all other goals to the needs of the client. For more information about the ZAG "Fiduciary First" standards, go to http://www.zeroalphagroup.com/FiduciaryFirst.pdf.
Brent Brodeski, managing director, Savant Capital Management, Inc., Rockford, IL., and a member of the Policy Advisory Board of the IFLC, said: "For too long, the investment advisor world has lagged other industries by failing to have the same kind of clear, meaningful and tough quality-control standards that are commonplace in other major industries ranging from manufacturing to medicine. Though the development may be overdue, it is finally happening in the financial planning world. Tough new standards for financial planners are now coming online and they are going to separate the true fiduciaries from the financial salespeople driven by commissions and other conflicts. While this no doubt will make maintaining the status quo difficult or even impossible for many planners, it is very good news for financial consumers who want to know who they can trust."
Jeff Buckner, founder and president of Plancorp, St. Louis, MO., said: "In the near future, investors and members of the news media who embrace non-fiduciaries touting themselves as investment advisors will have no one to blame but themselves. Already today, there are two very different types of financial planners -- fiduciaries who are holding themselves up to the highest possible standard and level of scrutiny -- and those who do not do so and continue to recommend costly, inefficient products and strategies that put the planner's commissions and other conflicts first and the client's needs and agenda second. As one industry observer has noted: 'This, of course, represents the elephant in the living room in financial services: the fact that there are two professions who look and act alike on the outside, who both define themselves as financial planners, but who recommend very different-looking portfolios and emphasize very different types of services.'"
Denys Pearce, managing director, Plan B Wealth Management, Australia and New Zealand and a member of the Policy Advisory Board of the IFLC, said: "It's a source of serious concern that so many lay investment stewards are unaware that there is a rigorous process required for due diligence of investment decisions. Naivety and 'best intentions' are not an acceptable excuse for poor investment decision-making and could leave these stewards open to criticism and litigation. Fiduciary standards and obligations are not a matter of personal opinion and preference. They are the result of well-established analysis and well founded procedures -- akin to a company director's considerable legal responsibilities. They help determine acceptable risk level, asset allocation, the selection of appropriate investment managers and monitoring of strategy on an ongoing basis."
Carlos Panksep, general manager, Centre for Fiduciary Excellence, said: "Tougher standards for fiduciaries that take that role seriously are the wave of the future for the investment advisory industry. CEFEX-certified firms, including ZAG members, have demonstrated their adherence to a standard of excellence reflecting the industry's best fiduciary practices. Investors and plan sponsors can be reassured that fiduciary practices have been independently overseen using a rigorous assessment process. In our opinion these firms are now on a path of continuous improvement, driven by a culture of fiduciary awareness and annual renewal assessments, which will encourage leadership and staff to perform in their client's best interests."
ABOUT THE ZERO ALPHA GROUP
Founded in 1995, the Zero Alpha Group (http://www.zeroalphagroup.com) is an international network of independent investment advisory firms that manage a total of more than $7 billion in assets. The nine current members of the Zero Alpha Group are committed to providing objective, long-term private wealth management solutions to investors, focusing on asset allocation and a structured, quantitative approach to investing. The firms in the Zero Alpha Group network share a common philosophy about investing and client service -- a focus on passive, tax-managed investment strategies while providing an independent financial planning solution for investors.
ABOUT THE FEATURED ZAG MEMBER FIRMS
The Plan B Group provides wealth management, funds administration and investment management services to more than 20,000 clients and has $1.81 billion in funds under management and advice. Established in 1986, the company employs over 200 staff in Australia and New Zealand. Plan B Group Holdings was listed on the ASX in July 2007. The Group's wealth management and advisory firms in Australia and New Zealand (Plan B Wealth Management) and portfolio administration and trustee company (Plan B Trustees) have held Investment Advisory and Investment Management certification from CEFEX since April 2007. For more information, visit http://www.planbonline.com.
Formed in 1983 as one of the first "fee only" financial planning firms in the Midwest, Plancorp remains totally independent and receives no commission income from the sale or recommendation of any financial product or investment. Registered as an investment advisor with the S.E.C., Plancorp is privately held and oversees total investable client assets of $1,479,000,000. Client relationships number approximately 350, with relationships often consisting of more than one person. In addition, most are both financial planning and investment management relationships. For more information, visit http://www.plancorp.com.
Based in Rockford, Illinois, Savant Capital was recognized by Financial Advisor magazine in 2007 as the nation's 12th-fastest growing wealth manager with in excess of $1 billion in assets under management. For the past seven years, Savant has earned a place on Bloomberg Wealth Manager's Top Wealth Managers List. Savant also has been recognized as one of the nation's top 100 financial advisors by Worth magazine each year since 1997. Since 2004, Savant has been selected by Medical Economics magazine as one of the "Top 150 Financial Advisors for Doctors" in the nation. Brent R. Brodeski was named in 2007 by Barron's magazine as one of the 100 best independent financial advisors in the United States. He was also recently selected as the #1 independent advisor in Chicagoland by Chicago magazine. For more information, visit http://www.SavantCapital.com on the Web.
SOURCE Plancorp, West Des Moines, IA; Savant Capital Management, Rockford, IL; Plan B, Perth, Australia; CEFEX, Toronto, CA
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