Have you ever asked your financial adviser what he/she does? What was the response? Was it a long list of things? Did it make any sense? I work with financial advisers, I network with them, I meet them all the time, they are everywhere. The second biggest turnoff when talking with these people is when they tell me they do everything. Maybe it’s just me but I constantly struggle with this. Or maybe it’s my background.
When I started in the financial industry I was pretty fresh out of college. I was deciding between working for a big wirehouse and a smaller boutique firm. I chose the smaller one pretty much because I didn’t want to work under someone else for a few years. I wanted to build my own business.
The funniest thing in the industry is training. I’m convinced the training is based on the business model that there will be huge turnover. Depending on where you look most statistics say something like, only 10% of financial professional make it through 4 years in the business. I’ve heard tons of stats that all seem to be slightly different. This is how the big companies in financial services train. They train people to sell products, as much as possible, as quickly as possible. Who benefits from this?
This is all I think of when people tell me they do everything. I was trained this way. “Don’t leave money on the table” was what an old manager use to say. How sad is that? I couldn’t run my business this way so I changed but most people don’t and they might never. I have learned one thing, the best advisers I meet niche. They have their specialties and work with other specialists. It might be fee only planing and they work with the product people. It might be people insurance people that work with investment people or the investment people that work with the planning people. The fact of the matter is that there is too much to know in the financial industry. There are too many areas and too many situations to be able to handle them all.
So when you sit down with your adviser or you meet a new adviser, can they admit what they don’t know? Do they have help and support of specialists not only behind the scenes? By the way that is what most advisers will say, “oh we have a group of specialists available to me”. Most of the time that means, “I’m on my own I just want to seem like it’s more than just me”. Next time you hear an adviser talk about all the things he/she knows and all the areas they can help you just realize that you might be talking to an expert at nothing.
How many hats is your financial professional wearing?
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I think a big problem with the pricing of financial advisers is that they are often encouraged to suggest something that is not in the customer’s best interest. If they were to find a solution that was best for each person, that might result in lower commissions. To be honest, it’s hard to blame them for looking out for their best interests, and as much as I’d like to think that if they acted like that they’d attract more customers, the reality is that the commission systems in many companies doesn’t always encourage the best decisions. Fee-only advisers have more incentive to help the customers so they will keep coming back.
What have your experiences been?
Daniel´s last blog ..Credit Series: Debt Usage
You make a great point about incentives. I might even go farther and say it’s about education. The industry training is flawed. It’s a business and they train financial people to sell as much as possible as fast as possible. It’s almost as though the companies expect the advisers to leave. It’s a tough business. Truthfully, I don’t know how you could get into the business as a fee-only adviser. Even with fee-only advisers I’ve seen plenty who are very investment orientated. That’s what they get paid on, assets under management. That’s their incentive.
Having done some work in insurance sales many years back, sales managers were encouraging us to refer to ourselves as financial planners. I never felf comfortable with that label and never used it. What ever we did was cover for insurance sales. What ever the customers question, life insurance was the answer, and always whole or universal life. That was the plan, there was no other.
I suspect it’s that way in many financial sales fields. The goal is to sell the company’s own products and everything else is mostly a prop to produce that result.
Personally, I think a good financial planner is someone who considers the customers big picture needs, integrating the various factors in their lives to produce the best alternative. In that regard, the FP shouldn’t really be selling anything, he needs to be totally objective. Maybe a fee based FP is really the place to find the real professionals.
Kevin@OutOfYourRut´s last blog ..Fast Track to Frequent Flyer Miles
Maybe I’m naive to believe that if you do right by people that it will only benefit you more in the long run. I guess it’s sort of a karma thing. To me, those financial sales people that push products regardsless of the client’s situation or best interest, they don’t last long. It’s just a matter of time and today it’s even shorter with the ease and access of information.
What I’m saying is if you do right by people then money shouldn’t be the driving force. It should just happen. You shouldn’t have to worry about the money but instead you focus on helping people. Does that sound crazy?
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