Major changes in other sectors of the financial services field were also occurring. For example, in the risk management world (primarily life insurance), EF Hutton disrupted the old-line life insurance carriers by introducing universal life that offered unbundled policy expenses, dramatically lower premiums, reduced commissions, and shifted risk to the insured (what a surprise) and continuing policy service to whomever. Stephen O'Neill, founding TFC shareowner and Executive Committee member, describes the situation: "… no commission payable for renewals led to little or no follow-up service. Brokerage life companies also competed against the traditional companies by undercutting term insurance premiums of the full-service companies… they had field forces… therefore no training expenses, cost of personnel to staff offices around the country, etc. The big companies dug in. They had expensive agency systems and high overhead… they resisted and postponed the change for many years."

The result of these and other changes was that the world became significantly more complex for the individual consumer with more products and few objective advisors available to individual investors. The need for unbiased advice — not from an agent of a company — was high, and relatively few independent advisors existed.

Personal Financial Advice Rendered Through a Collaborative Platform

It was impossible for a single professional to be competent in the many complex financial and legal areas that affect the individual client, such as income taxes, investments, retirement plans, insurance, real estate, estate planning, and more. TFC concluded that the solution was a group of experts from different disciplines who would sort through issues for the individual and give worthwhile untainted advice. The Financial Collaborative assembled a strong team of knowledgeable advisors.

Stephen O'Neil describes the mindset of the advisory team: "We shared a common philosophy… the client and service are paramount; obvious to us but perhaps not to all observers. TFC instituted the disciplined approach of an internal meeting every Wednesday to review client plans… the advisor working with the client would prepare the exhibits, outline client objectives and the team would weigh in on problems and potential solutions. The client's assigned advisor would take the input from the group and revise the exhibits for the next meeting. This has continued and has had the additional effect of educating all participants, thereby honing TFC's planning skills. It ingrained planning into the culture of the firm and reduced the risk of unsupported recommendations. TFC's Financial counseling is viewed by the firm as the most important deliverable today, whereas money management amongst other firms, although in some respects a commodity, is the business model driver."

____________

Proceed to Uncertain Beginnings >
 
< Return to Part One — History of the Fiduciary Role in Boston