Why client trust is important as a financial play-caller

November 8, 2016 by Jason Pickart

about the author:

Jason Pickart

Account executive

Jason facilitates and empowers organizational change with enhanced technology and creative solutions for some of the largest and most successful enterprise firms in the financial services industry. Utilizing his Finance background from Xavier University, he consults with executives regarding UX and UI design, big data aggregation, and cybersecurity. When he is not driving technology innovation within financial institutions, he likes to spend time golfing, fishing, and exploring the Cream City.

Falling on the same day as a shockingly low-scoring professional football game, an equally shocking 60 Minutes interview with Jeff Rubin regarding the National Football League Players Association (NFLPA) took place on October 23, 2016.

To summarize the toic of that interview, in 2003, Jeff Rubin ensnared dozens of National Football League (NFL) players into a risky investment of electronic bingo machines that cost investors tens of millions of dollars and the NFLPA Union did not take measures to stop it until it was too late. Rubin was a prominent financial advisor, until it all came crashing down on him after he gambled with his clients’ money and lost millions.

At one point during the interview, interviewer Armen Keteyian asked Rubin if he ever provided his clients with the subscription agreement, and then followed up that question by asking if he was being negligent. Rubin’s reply was, “I don’t know the answer to that question, ‘Was it negligent?’ Looking at it now, it’s awful, OK? I put my trust in a lot of attorneys, just like the players put trust in me.” The dialogue between Armen, Rubin, and a few of the professional football players who were Rubin's clients drew an eerily similar comparison to what is occurring within the financial services industry with regards to the DOL rule.

The message of the DOL fiduciary rule

The DOL rule is intended to help ensure that Americans receive financial advice that is in their best interest. According to an article published in Inside Counsel and written by Chris Thorsen, “The DOL’s final fiduciary rule and related exemptions are intended to protect investors by requiring all who provide retirement investment advice to retirement plans and IRAs to abide by a 'fiduciary' standard – putting their clients’ best interest before their own profit. The basic structure of the fiduciary rule is that financial advisors and institutions are not permitted to receive payments creating conflicts of interest with their retail retirement investors without meeting a prohibited transaction exemption.”


This description of the DOL fiduciary rule is fitting because in the aforementioned 60 Minutes interview, Fred Taylor, a former client of Rubin’s, stated that Rubin presented the electronic bingo investment by stating, “Look, we’re gonna have a meeting up here. I, I think it’s something big. And you guys would probably enjoy it. You know, you’ll probably all be rich for the rest of our lives. I’m talkin’ crazy rich. Life after football money. It’s really good.” Now Rubin had a four percent ownership stake in Country Crossing. 60 Minutes has also obtained documents showing that 10 percent of the money Rubin raised from players went into Pankas Holdings, his personal corporation. Jeff Rubin desperately needed the money because in April 2008, the IRS filed a federal tax lien against him in the amount of $440,000. On top of that, he was underwater on his $3 million house.


The two key aspects in this example that are pertinent to the DOL Rule are “Conflict of Interest” and “Client’s best interest regarding retirement.”  Armen put it best when he told Rubin, “You’re responsible, Jeff, for managing other people’s money, advising them. And you’re in a financial mess.” The DOL rule will not protect individuals from making poor decisions. Frankly, if the advisor a client is paying to manage their finances is incapable of managing their own finances, it would be wise to choose a different advisor.


While instances such as these may not be entirely avoidable, there are red flags present within the system that should have been top of mind for the players, such as the fact that about half the league uses financial advisors registered with the program. The union says applicants to its program must pay an entry fee of $2,500 and agree to an extensive background investigation. But how vigilant can the union be in monitoring its financial advisers when Kevin Carreno is still listed on its online directory? Carreno was killed in a plane crash seven months ago.


The DOL rule is seeking to improve upon the very basic principle of the financial services industry and of creating a reputable marketplace where everyday individuals are encouraged to trust professionals with their life saving, who will be kept in line through the checks and balances this ruling will institute. In turn, the advisors that adhere to the protocol will be highly compensated and will draw more business to themselves by keeping their clients’ interests at the core of their model.

Educating clients about their best interest


Defining “best interest of the client” can be difficult when there are variety of services and vehicles that can be recommended. Also, theoretically, the “best” interest of a client would be to have an established model set in place, free of charge, which allows individuals to reach their goals as quickly as possible, maximizing profits, and eliminating any possibility for deficit. Due to the fact that the financial services industry would not exist in this theoretical approach and the sole fact that clients are paying their advisors to make recommendations, there needs to be a system in place that educates the clients on the recommendations they have been given and how it will positively impact their current financial situation.


There is no better way to educate your clients and showcase your value as an advisor than by having the capability to provide your clients with an indefinite amount of probability scenarios and then having statistical, theoretical, and graphical representations that are easy for the client to understand. Once your clients are equipped with this knowledge you are providing an avenue for them to clearly understand and comprehend the potential benefits and losses of each option. Advicent Solutions’ flag ship product NaviPlan will allow you to distance yourself from the traditional model of bearing all of the responsibility of being the quarterback for your client’s financial game plan. Instead, NaviPlan designates you as the play caller guiding your clients, as they assume the position of quarterback, and make the decisions they believe will best help them achieve financial success.    

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