To have a fiduciary role is to put the financial interests of customers first. That customer-centered principle would seem to be at odds with self-centered priorities such as making a profit (to the implied disadvantage of customers). But show me the business that truly cares about its customers’ well-being and I’ll show you an organization destined for sustainable greatness. Being customer-centered is no handicap.
Financial executives will be pardoned for failing to understand or embrace their potential fiduciary role when they are not narrowly involved in guiding investors. After all, there are at least four major definitions of fiduciary responsibility and scope if we only consider written standards from the SEC, Department of Labor, CFP Board and NAPFA. Like most standards, these are minimums. Those already practicing the underlying customer-centered principles can feel vindicated that they have been ahead of the curve for some time, focused on optimums. Others can feel something new and painful is being jammed down their throat.
Who would be the best person on your business’ leadership team to make sure that any decisions about a product’s profitability be paired with the intended customer’s financial benefit? Marketing executives may talk about it, but the financial executive has the means and fiduciary responsibility to measure and report on the customer’s benefit. That means the cost and profit for each car built should include the total cost of ownership, as well as the retained value of the asset at resale. A Tesla Model 3 may cost more to buy at $35,000 but can cost much less to own, compared to the competing Detroit products. When was the last time you saw that information on the new car sticker at GM or Ford? It’s on the door of the new refrigerator you are thinking of buying. That means it is possible to know and, when known, could create a competitive advantage. There is that win-win, enhanced by adopting a fiduciary role.
Let’s reflect on some airlines that have been in the news lately. One so-called economy airline has been found to charge the same or more for flights as the average industry fare. Economy is an illusion. The true cost is accomplished by adding to the ticket fee a la carte pricing where carry on and checked luggage are all above, beyond and in addition to the ticket price. One airline that has practiced customer-centered fiduciary responsibilities for many years is Southwest Airlines. They’ve offered easy to understand ticket pricing that includes at least the first bag free, hassle-free boarding where you get to sit with the rest of your party, on-time performance and seating with space that doesn’t cost extra to get all the inches needed by your legs. What many don’t know is that SWA is the leader in domestic passenger miles, greatest number of consecutive profitable quarters, employee profit-sharing and record number of years without bankruptcies. It’s another example of fiduciary practice supporting both customer well-being and producer competitiveness. It’s about time the financial executives involved in achieving these successes be called enlightened heroes.
Financial executives have the ability to think in a resistant, narrow way about fiduciary responsibility. We could instead use our role and minimum fiduciary standards as the platform for broad strategic leadership leading to optimum customer-centered excellence. A few fiduciary questions you can ask your leadership colleagues in the next meeting on product development, pricing, profitability, customer satisfaction or competitiveness:
- How and to what extent does this product improve the financial well-being of our customers?
- What is the half-life of this product and how much will it cost the customer to own in that time?
- What is the single most effective change or innovation that will noticeably improve the product’s asset value and customer’s experience?
- Is this product the intended users’ definition of excellence? If not, why not?
The top executive of one client organization was intrigued with the possibilities. Starting with the infusion of fiduciary thinking in the creation of his new strategic plan, his team moved the enterprise from 25
th to within the top five of 50 competitors within only two years. Customers swamped his team with kudos, they won the Baldrige National Award and saved over $2 million on just one of the first strategic deployment projects. If this sounds like a result you could have, it is.
Robin L. Lawton is an author, customer strategist, motivational speaker, consultant and executive coach.