In Your Best Interest: An ALM First Podcast

7. The New Norm for Credit Unions with Nick Ambrosini

September 17, 2020 ALM First Season 1 Episode 7
In Your Best Interest: An ALM First Podcast
7. The New Norm for Credit Unions with Nick Ambrosini
Transcript
Nick Ambrosini:

I think you just have to take bigger risks. Um, and at the end of the day, if you're sitting on 12-15% capital, you have a lot of wiggle room to take some risks. You build capital for a time of need, and I would think now's a time of need to invest heavily into, you know, you don't have to get hung up on a buzzword, digital disruption or digital transformation.

Mike Ensweiler:

Welcome everyone to the 7th episode of In Your Best Interest: An ALM First podcast. The show that will explore common depository challenges, give you an insider's view of the latest market trends and share stories and insights from industry leaders. I'm your host, Mike Ensweiler. Aging membership, broader fields of membership, non-traditional competition, technology, hiring from outside the industry, and apparent wave of longstanding CEO's retiring together with economic and regulatory challenges are creating a new dichotomy for credit unions between the new and the old way of running the business of credit unions. This week's episode will focus on this new norm. Today we are joined by Nick Ambrosini, Executive Vice President and Chief Financial Officer, as well as the recently named CEO of Valley Strong Credit Union in Bakersfield, California. Thanks so much Nick for joining us today.

Nick Ambrosini:

Thank you, Mike pleasure to be here.

Mike Ensweiler:

I saw that you've recently been named the next CEO of Valley Strong Credit Union. So I just wanted to start out by congratulating you.

Nick Ambrosini:

Thank you. It's been one, uh, one heck of a journey to get to this point. That's for sure.

Mike Ensweiler:

I bet it has. And before we get into the theme of the day, which is the new norm and credit unions, why don't you, for the benefit of the audience? Tell us a little bit about yourself.

Nick Ambrosini:

Yeah, so my name's Nick Ambrosini, born and raised in California. I did my undergrad at UC Santa Barbara, majored in economics and accounting started my career in the credit union industry in 2007. And it's been a wild ride to get to where I'm at today.

:

So tell us something about yourself that not many people know. Um, well, I'm a pretty private person, but I am a, uh, I'm a girl, dad of three amazing girls, ten, nine, and three and a half. I'm horribly outnumbered at home. We are a modern family, a blended family. So, the ten year olds' my stepdaughter, the nine year old is my daughter and the three and a half year old is our daughter. So, uh, having a blended family teaches you a lot of patience, which is good. I could use some, uh, from time to time,

Mike Ensweiler:

Especially in your new role, you'll need it.

Nick Ambrosini:

Yeah and living in a house full of women, uh, you learn, uh, to it's okay. Not to be right. And, um, to not sweat the small stuff for sure.

Mike Ensweiler:

And I think that probably helps you professionally as well.

Nick Ambrosini:

Definitely, definitely. There's a lot of parallel there that you can, you can learn from it.

Mike Ensweiler:

So, you know, one of the things I was just reading about the credit union and, you know, in thinking about you and your journey, you've been instrumental in turning Valley, strong credit union around from the breakup conservatorship to a Forbes number two rating in the state of California in 2020, take us down that path.

Nick Ambrosini:

Yeah. So when my career started in the industry, it was in, uh, late 2007. I started my career in risk management of all places, which was a great place to be in, uh, to watch one heck of a ride, um, got to see the entire great recession from that, uh, role, uh, running risk management. I quickly learned everything not to do, uh, which was, uh, almost as important as learning what to do. Um, from there, my career went into financial planning and analysis, finance, CFO, EVP, um, but as far as, you know, the great recession and where we were, we did a lot of things, um, in a very traditional credit union way back then. Very addicted to fee income, huge indirect, portfolio where we pay the dealers an exorbitant amount of money. We had a very large reliance on, uh, CD funding with a lot of single product members. So when things went bad, they really went bad for us. Um, massive charge offs and our real estate and auto portfolios, corporate credit union, right offs approaching$8 million, uh, several million dollars in, uh, impairment on investments. Ultimately our capital plummeted, uh, we bottomed out in June of 2010 at 4.31% capital. Uh, we had the, uh, the joy and pleasure of having our regulators in our office every four months for a two week exam. Uh, so it, uh, as soon as they got out, uh, you know, we started working on their laundry lists and before you knew it, they were back in again, four months later. Uh, so we went into, you know, massive capital preservation. We were never conserved. Um, they wanted us to dig out from it. So we had to shrink in order to preserve capital. And 2008, we hit$1.8 billion. We shrunk all the way down to$1.2 billion in 2011 to preserve capital. And throughout that time, you know, we closed a half a dozen branches. Unfortunately we had to lay off several hundred team members. A new CEO came in and brought forth a brand new management team. The entire C suite was brand new. Before they could do anything, they really needed to heal and fix the culture, build a whole new culture, one that was completely different than the way the organization historically operated. Ultimately we recovered very quickly bottoming out in June 2010 at 4.31%, we got to 7% by the end of 2011. So a pretty swift recovery, but pretty painful at the same time.

Mike Ensweiler:

I bet it's been a tremendous learning experience and quite the wild ride. And so, you know, knowing where you've come from to where you're at today, you know, the credit union started in 1938 as a small teacher's credit union. And now you're Valley Strong. So clearly you've not only been able to preserve what you had, but now you you've solidified the foundation again, as an outsider looking in, but you've solidified that foundation and you're poised to grow outside of Bakersfield, which was your traditional base of operations.

Nick Ambrosini:

Yeah, absolutely. And for several years, we tried to expand our field of membership under the federal chartering process and failed miserably for one reason or another. Um, there was a lot of scrutiny from the ABA on, you know, the route we were trying to expand as a multiple common bond low-income designated credit union and we could never really get the areas we wanted, which were not much. Uh, located in Kern County, headquartered in Bakersfield, California. We wanted to move up the San Joaquin Valley. Um, it wasn't like we were asking for a massive table stakes. Um, so ultimately after our second time going through a rebuttal process and a denial, we converted to a state chartered credit union to get us the field of membership that we desired. And throughout that process, we rebranded as Valley Strong Credit Union. Uh, we used a national advertising agency to help us with all of the research and rebrand campaign. And it's been very well received.

Mike Ensweiler:

It looks like it's from my seat in the stadium, it's been a great job. And so now you've fixed the financial foundation. You're poised to grow, you rebrand, and then COVID hits. So what kind of challenges has that placed on your operations as well as your ability to grow?

Speaker 1:

I mean, first and foremost, you gotta take care of your team and be able to serve your members, even if that looks different. So we've thrown everything, but the kitchen sink at this, um, employing hazard pay, uh, A and B schedules to ensure and reduce the risk of cross contamination, we've purchased more plexiglass than I can, you know, truckloads of it to, uh, provide barriers at every single branch location and back office location. Uh, we, at our peak, we had about 40% of our staff working remotely, um, which was a big IT push. Uh, we could not buy a Microsoft Surface laptop, uh, for quite some time. I think we bought every single one we could find. Uh, so the supply channels were definitely stressed for a period of time. Um, thankfully all of our team members, uh, are safe and sound. We've had several, unfortunately who have tested positive, but everyone's made a full recovery. And, um, when we had some, uh, a fairly high amount of cases, at one point, we had a close about half of our full service branches just to be able to staff an appropriate, uh, service level. Uh, we closed branches that had drive through so that all of our locations had some way to serve numbers, but, uh, the lobbies were closed and about half of them. Um, so at the end of the day, I think it really puts a bigger emphasis on being agile. We've always prided ourselves in being able to take an idea and get it downstream in a fairly quick way where we're not a big bureaucratic committee type of organization that requires a lot of gates to get things done. And I think that's just a big takeaway is you gotta be able to pivot, um, and preferably be able to pivot in any environment. You take the pandemic away, market volatility requires a certain amount of being agile and most credit unions are operating in a very traditional command and control type of structure that, you know, I think leaves them, you know, left behind sometimes.

Mike Ensweiler:

So, you know, one of the old ways of doing business was I want to expand to a new area, either look at M&A, or I put a branch in a community that I want to grow in and I started advertising and put some folks in place in that area. Given, kind of, this new pandemic world, just plop in a branch in a location, clearly isn't going to help you grow at this time, especially in the state of California. So what other channels, what other means or strategies if you're willing to share, are you looking at to help grow the business?

Nick Ambrosini:

Yeah, so we are, we are actually opening two branches this month, um, ironically, um, in the new market. So we got our field of membership expansion, the first two branches and the new market open, one on the 14th, one on the 21st, we have two more under construction. Um, serving those areas are going to, it's going to be definitely very interesting in the land of COVID, but, uh, we think it's an step for us to get there. We are, uh, you know, seeing a lot bigger increase in our digital channels, which is, uh, cause us to look at some friction and potential pain points. We're re-evaluating online account opening, uh, looking at, you know, what can we do to get to a best in class type of solution. I think we're kind of middle of the road, which is okay, but how do you get to that next level to make it easier to interact and, um, so that's something we're looking at. We're also looking at some AI and chat bot technology to help the burden and contact center. We have a seven day a week, seven to seven contact center that saw a massive spike in volume and still has seen one where we shifted a lot of extra resources towards that direction, but trying to work smarter versus just throwing extra bodies at the different delivery channels and being responsive to the member behavior changes.

Mike Ensweiler:

Yeah, I think that's probably as you attest I'm going to guess is more important than ever. So, you know, one of the things is I talked to, to CEOs/CFOs across the country. It seems like most institutions are flushed with cash, um, given everything that's going on. They have excess liquidity, um, and maybe outside of, kind of mortgage refinance lending activity isn't, or maybe it's more a credit issue, I think for a lot of institutions as well, but a couple of questions come to mind having said all of that as is, do you have that extra cash? And if so, how are you deploying it in this environment?

Nick Ambrosini:

Yeah, we have seen an increase in cash. Uh, we saw about a$200-$300 million increase in cash, which I think is fairly similar across the industry. 15% type of surge deposit. Although we aren't really seeing a ton of excess cash sit on our balance sheet. Um, we have had record mortgage volume all year, which has helped, uh, spend a lot of that money.

Mike Ensweiler:

Are you portfolioing those mortgages?

Nick Ambrosini:

We're portfolioing 100% of all of our paper, at least for a period of time to get some carry trade. Uh, so no forward flow sales there. We are very active on a secondary market side, both selling and buying. Historically we have been a net buyer, uh, although we will slowly transition to being a net seller. And part of that is because we actually started, um, partnering with FinTechs late last year. So we have four FinTech, uh, relationships specifically in the lending space that, um, on an annual basis will deliver us about a billion dollars in loan volume, uh, that has created excess, uh, supply, which is where we're going to basically be transitioned into that net seller space. So we're in a unique position, which has benefited us greatly is that we don't have a lot of cash burning a hole in our pockets. Uh, we actually sold, uh, about a hundred million dollars out of our investment portfolio because of the Fed put to clip, uh, some of those large gains. And we already had the money, uh, to put the work in some of these FinTech relationships. So we rotated out buck gains and, and got a higher, uh, spread. So if you can do that, we'll do it all day long.

Mike Ensweiler:

Yeah. Make that trade all the time. Absolutely.

Nick Ambrosini:

And being one of the few credit unions who has loans to sell, price discovery has been very advantageous for us during these times. So we have loans to sell and there's plenty of people willing to pay a premium for what we have. So it's in a good, we're in a good spot to be in.

Mike Ensweiler:

That is for sure. You know, a lot of people I talk to, you know, that, that's the question that I pose to them. And I mean, I think you've given us two very solid ways that, that you're grinding out some extra basis points, but, but how do you in this environment? Cause I think it's very different the way you're doing business today versus six months ago or a year or two ago. And that it really is a grind to eke out some extra basis points. Um, are there other ways that you're thinking about it that maybe you weren't not so long ago?

Nick Ambrosini:

The good news is we've been in a persistent low rate environment before. So you kind of go back to that toolbox, which wasn't too long ago to say, okay, we know we're going to be in this environment. What can we do? So we've really looked at non-interest income on the value add side, uh, we've restructured several contracts, um, specifically trying to optimize networks as it relates to interchange. We think that's still a, got a big growth opportunity. We're seeing double digit interchange income growth year over year and have for quite some time. So that's an area that we're definitely going to lean into a little bit more. And then COVID has allowed us to really take a look at our staffing models and delivery channels, even though all of our branches are open. We only staff every other window for six feet of physical spacing. And ironically from a transaction efficiency perspective, we have never been more efficient from processing transactions. And when we had half our windows open, which is kind of a head scratcher, uh, but it's something that allows us to believe that we can move forward with a smaller workforce or reallocate them into areas of more revenue focus versus transactional. Um, so those are kind of the areas we're looking at in addition to some of the FinTech relationships, and trying to book more gain on sale through being a net seller.

Mike Ensweiler:

Being a half glass full guy, you know, one of the, I'm trying to find some of the silver linings or the benefits that have come from the pandemic and, you know, personally, just looking up, working from home now, and I look out my window, I see more people walking, their dogs or families riding bikes, then I ever have before. People I had no idea even lived in my neighborhood. You know, I look at that and I'm like, that's something really cool that has come out of all this. And so looking at, you know, operational efficiency with half staff, um, you know, taking that step back may or may not have been something you normally would have done. But to me, that, that certainly is a, maybe a silver lining for the credit union that's come out of this new environment, but are there other silver linings that you've seen as a result of COVID?

Nick Ambrosini:

Yeah. And I definitely try to be a glass half full or preferably full type of outlook. You mentioned looking out your window and seeing people walking, uh, you know, you've heard of the quarantine 15, you know, you can go the opposite route. We bought a home gym during, COVID to try to, you know, not allow the quarantine 15 to happen, but, but from a credit union perspective, I mean, if you weren't doing it before you gotta be investing in digital, um, you know, there's a lot of buzzwords out there, disruption, digital transformation, but at the end of the day, how are your members interacting with you and are those digital channels enough to keep them engaged and stay relevant? I think, you know, that's one important piece of it, but before you can even get to there, you really have to understand your member behavior. How is your membership segmented? What do they want? Not every credit union memberships, the same, uh, there's plenty of memberships who don't crave a digital interaction. Uh, but you have to understand your member behavior and, and segment it. Uh it's it's not all homogenous that's for sure.

Mike Ensweiler:

And I, I think that's a really great point, especially on the marketing side, you know, you hear about an aging demographic inside of credit unions. And I, you know, I think to myself, what challenges does this aging membership place on not only your institution, but the industry as a whole? And since I've known you, you've always been someone to me who's much more progressive in terms of technology and balance sheet management than a lot of other people I talk to. So segmenting that membership and that makes perfect sense to me. So then how do you deliver them products and services in a way that's meaningful for them? Because you're 75 year old retired teacher. I'm sure it's very different than that college age student who you're trying to attract and make loans to and all that.

Nick Ambrosini:

Yeah. I, you know, so much of the industry right now is flushed with cash and they're trying to find yield and trying to find earning assets to invest in. And I take a slightly different look at it. We're flushed with cash and I want to keep the cash. How do I find a way to keep the members who have parked this extra money with us? How do I make sure it stays with us? Because we're long term, I think we're going to have a much bigger issue on the liability side of the balance sheet than we will, the asset side of the balance sheet. And part of that is because of those aging demographics. So, you know, for us, it's, you know, finding a way, to get deeper with the younger generation. Segment the membership to figure out where are they banking. Mining the transaction history to figure out where they're making payments to what type of P-to-P solutions are using and trying to create appropriate lifecycle or segment based, uh, product offerings that are going to keep them engaged. Because as you know, our membership, isn't much different than a lot of credit unions where, you know, 20% of our membership controls 75% of our deposits. What happens, and we're not confident there's going to be a wealth transfer that stays with the organization. So part of that, I think also has to be a holistic, uh, embracing of wholesale funding. Um, you know, pain, uh, top of the market, uh, CD rates or money market rates to attract money, especially as we enter a persistent low rate environment isn't great for your margin. So is there better ways to gain funding and perhaps that's through the wholesale market? Uh, it's something that actually benefited us quite a bit. As we grew, we, we issued several hundred million dollars in broken CDs with call options. And as rates came tumbling down and as money came in from our members, we put a lot of those, uh, took advantage of a lot of those call options and put, uh, inefficient leverage, uh, back into the market. So I think it just kind of gets back down to, that'd being agile, being willing to pivot, but really understanding where is your next generation of deposit funding gonna come from? I know everyone's so worried about what you're going to do with the cash, but in a couple of years from now, people are going to be wishing they had that kind of cash.

Mike Ensweiler:

Yeah, I agree wholeheartedly. And I love that approach. You know, one of the things, again, as I talk to CEOs CFOs, and we talk about different balance sheet management strategies, um, you still have a fair number of, of institutions who say, you know, my, my board doesn't want to borrow or leverage that, you know, it's kind of a scary thing. And so, you know, I look at you coming from an education based credit union, you clearly have a fairly progressive board of directors because, whether intentionally or not, this is something that you've been doing for a number of years.

Nick Ambrosini:

Yeah, you know, our board historically was very conservative and traditional. And so I think it really gets down to the messaging and on what's important. And so for our board, we've been around a long time and our board wants to make sure we're around a long time. So that relevancy factor comes into play. So we know we need to grow, which is why we converted and took a larger field of membership. So they are open-minded, uh, if you can frame the argument that this is just another tool in order to achieve our overall objectives, and it's not some esoteric, you know, foreign, uh, element, it becomes a much easier argument. And so often you hear, you know, credit unions where they have a board who's just flat out. We're not going to do that well because of lack of education and a bad framing of an argument, uh, if you documented and you, and you pitch it, you know, I, I've never, uh, got a flat out, no from our board where they're just not willing to listen to me. They're always willing to hear me out and understand, you know, the perspective of why this could be a good idea. So I would just encourage credit unions to do a better job on the front end of educating before just saying, Hey, we want to borrow 50 million. Well, why show, show the show it, um, there's, there's so many tools available nowadays where you can, you can look at marginal costs of funds where potentially wholesale, uh, funding is much better than cannibalizing a deposit base. So, uh, it just gets down to messaging.

Mike Ensweiler:

Yep. And so what I heard you say is do your homework on the front end. Education is key and, and this doesn't happen overnight. So it's probably a process of education, um, not just coming to the board and month one saying, Hey, here's our great new idea. We want to do it. Cause I got to believe like most volunteer boards, they're going to take a step back. Most of these people are non financial professionals or were before they retired. And so just taking that time to digest, understand, get comfortable with it. And also knowing that, um, this isn't some cockamamie scheme, this is a tried and true prudent balance sheet management strategy that credit unions, banks, whoever has been doing for a long period of time. So here, Nick, here's the big question, you know, when I met you, you were, I think in the risk management, financial planning kind of area, um, you know, you've gone from a cube to the corner office in a relatively short period of time and there appears to be a new generation of leaders taking over, um, as these older CEOs are retiring. So I'm really curious to hear from you, what do you see as a vision for the industry in the next 10 to 15 years? Where are we going?

Nick Ambrosini:

Yeah, and I think really, I said it a couple of times, but relevancy becomes, I think table stakes and you know, how we interact with our members and to the communities we serve. I think credit unions have kind of as an industry falling asleep a little bit. Um, you know, as a number of credit unions have declined year after year after year, our market share, uh, as far as total deposits is basically stayed flat and you look what's happening from a challenger bank standpoint from a FinTechs, uh, space standpoint, uh, justice month, uh, or actually late last month, American Express acquired Cabbage. That's a huge play. I mean, how many small business owners use C for a business card and now they can get all of their lending needs without having to go through, uh, you know, two years of tax returns and just a laborious process with any type of community bank included where, you know, Cabbage can improve them, but by just taking a dump from their, um, download from their Square transaction history and approve them, um, that's huge. And you look at, who's gaining a ton of market share during COVID. You look at companies like Chime. They have some of the fastest, uh, deposit growth, uh, during the spirit of time and it's because it's easy to use. Credit unions for so long, have looked at FinTechs or challenger banks as competitions, and just shun them versus trying to either partner with them or learn what are they doing that we could apply to make us better. So at the end of the day, I think what's inevitable is there's going to be even a greater acceleration in consolidation as consumer preferences be a change. I think you're going to see a lot of the smaller credit unions just lose membership. Their financials will improve because if they shrink assets, their net worth will go up, but they're essentially, you know, a lame duck. Uh, they have an eroding value prop in a declining membership based even if their capital's strong and from a fiduciary standpoint, at some point I think those boards will say, you know what? We need to partner with somebody to provide better services for our members. So I think the industry will see even greater consolidation, which could be a blessing, especially if the more progressive credit unions embrace. Some of these digital offerings, embrace partnering with FinTechs. You know, my goal is that we get smarter and we can find a way to leverage some of these technologies and creativity augment our staffing with people outside of the industry, especially from a retail perspective, a marketing chief experience. Those are all positions. I think the industry would do a great job if we could bring in different talent from outside, uh, financial services. Um, and it'd be great to see our market share increase. And I think I can, but I think it's gonna require a different way of doing things and the tried and true, um, you know, traditional mindset. I think it's kind of a broken model.

Mike Ensweiler:

When I hear kind of a new way of doing things or non- traditional way of doing things I put on my old retired kind of board hat. And I start getting a little nervous from the standpoint of how do you balance kind of easy to use, especially on the credit and the underwriting standpoint with prudent risk management, preserving the member's capital. How do you, how do you do that in a, in a new world?

Nick Ambrosini:

Yeah, I think at the end of the day, automated, um, especially on the consumer side of the house, automated underwriting algorithms typically have a better credit performance than one that has manual. You take out the human bias, uh, whatever that may be to someone who may have credit to whatever, you know, um, someone who believes they're overextending themselves, even though they fit ratios, but they want to decline them. You see that all over the place in credit union land. And I think we're there. The technology is out there to build and refine models to end up with a more consistent credit box and with more predictable loss models. And I think it's something that very few credit unions feel comfortable with because they want that human touch, which you could still have a human touch, but I think, you know, you can embrace it. And I think the data will show over time that it'll outperform a super manual labor intense effort.

Mike Ensweiler:

One of the parts that I I'm bummed about every time I do one of these podcasts is that they're so short. They're only 30 minutes in nature and we're bumping up against that timeframe. And you're so easy to talk to. I could spend a half a day here doing this and it would never get old. So in the few minutes that we have remaining, what should I ask you about what's top of mind for you these days? What closing thoughts do you have?

Nick Ambrosini:

Yeah, I would just challenge, um, credit unions and, and just people to take a leap. Um, if you're not uncomfortable with your strategy, uh, I don't think you're pushing hard enough and I think it's something that we're going to have to get more and more comfortable with as competition accelerates. Um, as a lot of these challenger banks and, and, and P-to-P solutions come in, you know, the fear is always what happens if Amazon is able to get an ILC bank charter and start taking deposits. Um, I think you just have to take bigger risks. Um, and at the end of the day, if you're sitting on 12-15% capital, you have a lot of wiggle room to take some risks. Um, you build capital for a time of need, and I would think now's the time of need to invest heavily into, you know, you don't have to get hung up on a buzzword now, digital disruption or digital transformation, but I think you got to figure out how are you going to engage with the next generation? Uh, and where are these deposit concentrations, know your data, uh, so that you can make informed decisions. Uh, I think that's the most important thing and education, education, education. You know, we talked about it earlier with the board, uh, you know, some boards are not open to certain ideas and I think that's so important to get that education.

Mike Ensweiler:

Well, thank you so much, Nick, for joining us today and sharing your story.

Nick Ambrosini:

Thank you, Mike.

Mike Ensweiler:

I want to thank you again, Nick, for taking the time to talk through the new norm of credit unions. At the end of each episode, I like to take a moment and let you know about some additional resources we have available. If you'd like to learn more, you can check out our website for upcoming webinars and educational events, as well as be on the lookout for the Valley Strong loans that are coming to market as always stay safe, stay healthy. And thank you for listening to In Your Best Interest: An ALM First podcast.

ALM First:

The content in this podcast is provided for informational purposes and should not be relied upon as recommendations or financial planning advice. We encourage you to seek personalized advice from qualified professionals regarding all investment decisions. Current and future holdings are subject to risk and past performance is no guarantee of future results. Podcasts should not be copied, distributed, published, or reproduced, in whole or in part. Information presented herein is for discussion and illustrative purposes only and is not a recommendation or an offer or solicitation to buy or sell any securities. The views and opinions expressed by the ALM First Financial Advisors’ speakers are their own as of the date of the recording. Any such views are subject to change at any time based upon market or other conditions and ALM First Financial Advisors disclaims any responsibility to update such views. These views should not be relied on as investment advice, and because investment decisions are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any ALM First Financial Advisors product. Neither ALM First Financial Advisors nor the speaker can be held responsible for any direct or incidental loss incurred by applying any of the information offered. ALM First Financial Advisors is an SEC registered investment advisor with a fiduciary duty that requires it to act in the best interests of clients and to place the interests of clients before its own; however, registration as an investment advisor does not imply any level of skill or training.