An open letter to financial
An open
letter
advisors
in the
U.S.to financial
advisors in the U.S.
OCTOBER 2016
OCTOBER 2016
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institutional
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in Europe.
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exacting standards of advice.
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expect you to be confronted by a blizzard of technical changes, relating to everything from permissible share
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process.
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willwe
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you to be confronted by a blizzard of technical changes, relating to everything from permissible share classes, to
grid compensation, to required client documentation process. Amid that blizzard, will you catch a cold? One recent
report said that one in ten of you are considering leaving the trade rather than face the reality.
MATERIAL
IS FOR
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Russell Investments // An open letter to financial advisors in the U.S.
How Russell Investments can help
Helping advisors respond to having more accountability for their clients’ outcomes is anything but new to
Russell Investments. It is our heritage. We have been a leader in fiduciary services for our clients for nearly
fifty years, and we can help you now.
In the words of Mark Twain, “history doesn’t repeat itself, but it does rhyme” – nearly fifty years after the
introduction of ERISA, the DOL rule is an attempt to close an important gap between the standard of care
received by institutions compared to individual investors. In the long run, we expect this disruption to help
individual investors, just as ERISA helped institutions.
But the pathway from here to there will be littered, literally, with trial and error. This is why we feel it is so
important to reach out to you at this time, and offer you our support in ascending to the three critical qualities of the fiduciary.
Expertise, Alignment & Accountability
A fiduciary’s obligations are essentially twofold: To know what you are doing – the “Duty of Care” – and to
exert that expertise in the client’s interest – the “Duty of Undivided Loyalty.” Over decades of refining our fiduciary governance process, Russell Investments believes there are three universal tenets to meeting a fiduciary standard, which underlie all of our investment products, including the ‘40 Act funds we offer advisors
in America: expertise, alignment and accountability. Adherence to these principals is essential to meeting
exacting fiduciary standards, and can help you to achieve and maintain your fiduciary responsibilities.
•
To begin with, there is expertise – in strategic asset allocation, manager research and selection, capital
market forecasting, managing risk exposures, or assuring first rate implementation, not to mention the
ongoing supervision and reporting of investment outcomes.
•
Next, alignment – clients need advisors on their side of the table in developing and managing their
investment programs. Achieving true alignment goes beyond demanding fee transparency and traditional conflicts disclosures; it requires deep understanding and ongoing management of the fees, costs,
business models and incentives of the portfolio managers, traders, exchanges, custodians and many
other players involved in the process. For more than 40 years, Russell Investments has been an industry leader in identifying the hidden costs and risks in today’s complex global financial environment and
developing programs that are faithfully aligned with client interests.
•
Finally, accountability – which assures that the roles and responsibilities of each party – especially the
client – are clearly documented and supervised.
Taken together, these three tenets can be adapted by advisors to achieve the principles embedded in the
DOL’s rule.
Expertise, Alignment & Accountability
Of course there is a difference between marketing slogans and real commitments to clients’ outcomes – like
never before it is important to recognize the difference. Russell Investments does.
If you are struggling to understand how to meet the challenge of the fiduciary rule, let us help.
•
At the initial level, we have developed analyses of the rule and its implications on advisory practices, including concrete steps you can take today that will set the stage for you to be ahead of your peers. That
information is just one click away.
THIS MATERIAL IS FOR FINANCIAL PROFESSIONAL USE ONLY AND NOT FOR DISTRIBUTION TO CURRENT OR POTENTIAL INVESTORS
•
Advisors who use Russell Investments’ funds go a further step: By incorporating our investment process
into yours, you can feel confident that you are providing your clients with products built upon the most
exacting legal standard in the industry – the fiduciary standard.
•
The most comprehensive help we can provide is for home offices seeking to create end-to-end programs,
incorporating optimized product components, aligned client fact finding and risk management processes,
and innovative practice management.
Whether you need a little education or a lot of re-engineering, you have a willing partner in Russell Investments.
Affinity for Advisors AND Capital Markets Insights
We stand with you at a challenging time. The regulation, plus very strong U.S. equity market performance in
recent years, may leave you wondering how you can review client accounts to accomplish two goals simultaneously: Show that you are meeting the new standard, and verify that your clients’ U.S. home country
exposure is appropriate.
We believe that we have a singular understanding of that intersection, having been among the first asset
managers to offer global, multi-asset diversification for U.S. individual investors. And with the industry’s
longest running practice management program, not only can stand with you; we want to.
Len Brennan
Chief Executive Officer
Russell Investments
Disclosures
The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment
advice from a licensed professional.
Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically
grow at an even rate of return and may experience negative growth. As with any type of portfolio structuring, attempting to reduce risk
and increase return could, at certain times, unintentionally reduce returns. No investment strategy can guarantee a profit or protect
against a loss. These views are subject to change at any time based upon market or other conditions.
Copyright © 2016 Russell Investments Group, LLC.
Russell Investments’ ownership is composed of a majority stake held by funds managed by TA Associates with minority stakes held by
funds managed by Reverence Capital Partners and Russell Investments’ management.
Frank Russell Company is the owner of the Russell trademarks contained in this material and all trademark rights related to the Russell
trademarks, which the members of the Russell Investments group of companies are permitted to use under license from Frank Russell
Company. The members of the Russell Investments group of companies are not affiliated in any manner with Frank Russell Company or
any entity operating under the “FTSE RUSSELL” brand.
Russell Investments Financial Services, LLC, member FINRA, part of Russell Investments.
First used: November 2016.
RIFIS 17942 01-06-002
THIS MATERIAL IS FOR FINANCIAL PROFESSIONAL USE ONLY AND NOT FOR DISTRIBUTION TO CURRENT OR POTENTIAL INVESTORS