What do you think of when you hear the word firewall? If you are a “computer techie” or work in corporate IT, you’re probably thinking about keeping your computer or network safe. Those of you who work in commercial construction may be picturing a concrete wall that would delay a fire moving between adjoining buildings. Perhaps you’re a car guy like me. I’m picturing that important part of the car body that safely separates the engine from the driver and passenger area. Regardless of your definition or use of the word, a firewall is a vital means of protection from potential danger or harm.
One of the significant challenges of the Financial Services industry has been the risk of advice tainted and compromised by the corresponding compensation to the individual offering the advice or recommendations. In earlier years, this was often in the form of a hefty upfront commission at the point of sale. Even though our industry has been progressing to ongoing or level fees, this conflict of interest still very much exists.
When Master’s was formed in 1994, we did our best to build safeguards to protect against this “conflict of interest” so prevalent in our industry. Later, in the year 2000, we became one of the first firms in the region to go to a team practice model with every team member being paid by salary instead of commissions. Since that time, we have been tweaking and fine-tuning our compensation policies and procedures to safeguard against this risk in every way we can think of.
Today, I can confidently say that we are not aware of any other financial planning firm that has built a more effective firewall between the advice given and the compensation received. Simply put, no team member at Master’s is ever compensated for any advice given or acted upon. We all work exclusively for a salary and the potential of year-end profit sharing bonuses based only on the firm’s overall financial success for the year, not on what a particular client does or doesn’t do.