The Pulse Episode 6: The Benefits of Remaining Calm

March 11th, 2020 · 5 min read

This time on the Pulse:

Orion exec says Coronavirus will underline the value of business technology; CFP Board nixes consumers’ ability to search for advisors by how they’re paid; Baird’s wealth unit backs away from Alaska’s Iditarod dog-sled race.


Before we get started, let’s give some thought to the benefits of remaining calm. For one thing, I think we can agree that tranquillity is more pleasant, and usually more productive, than panic. We’ll return to this theme in just a few minutes.



Coronavirus Heightens the Need for Client-Centric Tech

Though the coronavirus’ impact on the economy is tough to call at this stage, some players are making educated guesses. 

On March 5, the Federal Reserve signaled its hunch the widening epidemic could dent the US economy. It trimmed the fed funds target rate by 50 basis points to a range between 1.00% and 1.25%. 

Then, prompted in part by the Fed’s reaction to the health crisis, Wells Fargo cut its outlook for the securities brokerage business. The bank says firms should expect to see per-share earnings shrink by 12% for 2020, and an average share-price decline for brokerages in the neighborhood of 22%.

Another possible effect of the coronavirus is a function not of its ability to spread, nor of its severity, but of its endurance. That’s according to Kyle Hiatt, chief revenue officer at Orion, a technology and asset-management provider to financial advisors. 

In Hiatt’s view, the crisis could pose significant challenges to client-centric businesses — and show these enterprises whether their technology is up to scratch.

“One of the great virtues of modern, cloud-based adviser tech is the ability to continue running a business in the event of an emergency,” Hiatt writes as a guest columnist for InvestmentNews. 

But, adds Hiatt, this conception is typically related to one-off natural disasters — “like fires and floods that might threaten localized data, or slow foot traffic because clients are physically unable to reach the office.”

But what happens if the crisis lasts not days, but weeks? 

As Hiatt notes, we’ve already seen reactions as diverse as “level-headed level-headed hygiene checks and calls for preparedness to price gouging and a panicked run on emergency supplies.” 

Other economic side effects include a rush by businesses to implement work-from-home policies, and a spike in demand for grocery deliveries. If the US follows Japan in closing all schools — an order in place there until April at least — Hiatt foresees cutthroat competition for daycare slots.

“Your clients’ financial lives are about to become even more complicated during a period of tremendous market uncertainty.”

To some extent, the complication may be mitigated by accessibility and communication. Using cloud-based applications means your clients can see their information wherever and whenever there’s connectivity. Communication between advisor and client can be frequent, with broadcast methods such as email alerts, texts and website updates bolstered by one-on-one tools like screen sharing and video conferencing.

In sum, says Hiatt, with the coronavirus casting a shadow of uncertainty across the globe, now is the time to make sure clients can contact you — and access their own key data — whenever they need to.

CFP Board Says Consumers Don’t Care How Advisors Get Paid

The CFP Board of Standards is under fire for making changes to a web-based tool consumers use to find financial advisors with the “Certified Financial Advisor” designation.

Before, the tool let people search for advisors by a number of criteria like location and how the advisor is paid, whether by means of commissions on trades, fees on assets managed, or something else, like a flat retainer, a project rate, or a combination of commissions and fees.

Now, contending that such information isn’t “very specific or helpful to consumers,” the CFP Board, which governs the CFP designation, has dropped it from their consumer portal, reports. 

Critics beg to differ, contending how advisors get paid is essential information for consumers. After all they say, fiduciary financial advisors — advisors tied to RIAs and trust companies — are prohibited from charging commissions on trades. But securities brokers, who are held to a lesser standard of conduct, are able to charge commissions and/or management fees.

Advisor Jeff Levine, a CFP with Blueprint Wealth Alliance, tells the move “seems like a step backwards. We’re trying for more transparency as an industry, and this is less transparent.”

And while some fee-only advisors tell consumers are increasingly interested in working with fiduciary advisors, the CFP Board says only 7% of searches using its online advisor-search tool asked how advisors are paid.

Further, the CFP Board tells ditching search terms around compensation underlines its policy of being “business-model neutral.”

Baird Drops Backing for Controversial Dog-Sled Race

Baird Private Wealth Management has ended its sponsorship of the Iditarod, an annual long-distance dog-sled race run in early March from Anchorage to Nome, Alaska.  

People for the Ethical Treatment of Animals, or PETA, touted the decision in a press release in early March. “Dogs used in the Iditarod are forced to run about 1,000 miles through biting winds, blinding snowstorms, and subzero temperatures,” the animal-rights group said. “More than half of those who start the race don’t finish because they’re too ill, injured, or exhausted to go on—and more than 150 dogs have died as a result of the race, not including countless others who were killed simply because they weren’t fast enough or who died during the off-season while chained up.” 

PETA went undercover to scope out the kennels of Iditarod racers. The group says the investigation uncovered widespread animal abuse, with dogs “denied veterinary care for painful injuries, kept constantly chained next to dilapidated boxes and plastic barrels in the bitter cold and biting wind, and forced to run even when they were exhausted and dehydrated.”

Adds PETA executive v.p. Tracy Reiman: “When they’re not being run to injury, exhaustion, or death on the Iditarod trail, dogs are tied up in the snow with nothing to do but run in tight circles until their paws bleed.”

PETA says Baird’s decision to drop the Iditarod came after it presented its findings to executives at Baird. Baird has issued no statement on its decision.

Among other companies to cut ties with the Iditarod in recent years are Coca-Cola, Costco, Jack Daniel’s, Maxwell House, Nestlé, Panasonic, Pizza Hut, Rite Aid, Safeway, State Farm, Wells Fargo and Alaska Airlines. 

An endurance race, the Iditarod involves teams of 14 dogs and lasts between eight and 15 days.The first official Iditarod was held in 1973.

Baird’s private-wealth group manages about $235 billion.


So now we’re back to the benefits of staying calm, both in the face of crisis and as a general mode of existence. For the Athenian philosopher Plato, taking things easy was an imperative for lifelong resilience. “He who is of a calm and happy nature will hardly feel the pressure of age,” he wrote. “But to him who is of an opposite disposition youth and age are equally a burden.”