Your Advisor is Working in your Best Interest, Right?
My business has an identity problem. You don’t believe me? Ok, try this out.
Imagine someone tells you that they are an accountant. You would logically assume that they are a CPA or at the very least, they have some sort of accounting degree. How about a plumber? One would be safe to assume that they have some formal training and lots of hours spent doing actual plumbing, right? Ok, now think about a financial advisor. If someone tells you that this is their profession, do you make those same assumptions? I would bet that you do. However, in my experiences, that is not always true.
Fifteen years ago, I got into this business because I had a friend who was our financial advisor. He basically recruited me into the business. At the time, I had an undergraduate and master’s degree from UB, and seven years of experience working in corporate America. When I interviewed and got an office tour, I looked around and quickly concluded that wow, if these guys can do this job, I can too. It was a bit of a flawed diagnosis. See, most of these people were not what I would consider a financial advisor. Yes, they probably passed the state life insurance license exam (with a couple weeks of studying, you could too). Some of them even passed a securities license exam or two. Again, not that big of a challenge. They wore suits and carried business cards saying “financial consultant.” But, dig a little deeper and you find that some of them had filed bankruptcy. Some of them lived paycheck to paycheck. Others didn’t finish college, and some never went at all. The training program offered to me and the other new recruits was mostly…..sales training. Woof.
It did not take long to realize that this wasn’t going to work for me. I was not a good fit. See, I had a conscience, and that kept getting in the way of potential sales. I could not do something for a client if I did not believe it would make their situation better. This experience was not all bad as I did learn some important lessons. The biggest takeaway? There had to be a better way. The part that always bothered me was that if I was parading around town saying I was a financial advisor, why did I need to sell them something to get paid? That never made sense to me. If they needed life insurance, that was great, but what if they didn’t? What if they needed life insurance but failed the health exam? Where does that leave your relationship with a client when you come at them with a full court press on life insurance and the process goes sideways? Nobody is better off in that situation. The bottom line is, you should never have to rely on financial advice from someone whose sole source of income is commission on something they need to sell to you.
After leaving the insurance salesman/financial advisor role, I went to an independent broker dealer. This was a step in the right direction and it got me much closer to my end goal of serving client’s needs first in a fiduciary role. There was no manager checking in on your sales numbers or how many phone calls you made each day. You were out on your own, either sinking or swimming based on how you served your client’s needs. However, there was still a piece missing. I could not make it work unless a client had money. By that I mean, there was no clear-cut way to charge a client a fee to just provide advice. I could take on and manage assets, but what if you were just starting out, fresh out of college and no savings to date? What if you just had a 401k at your job, which is not eligible to be moved or managed by a third party? What if you had only student loans and high-income potential, but no savings? Sorry to say, but the business had not yet evolved to where it is now, so I could not take you on as a client.
Which leads me to today. I think I finally found the way. As an owner of my own Registered Investment Advisory (RIA), I have a couple of different ways to serve clients. A client can pay me a fee to advise them on what they have. A client can pay me to manage their assets. Or a client can do both. I get paid to be a resource to my clients, sitting on the same side of the table they do, helping to make the best decisions about their own unique financial circumstances. It is not enough to just focus on the investments or just set a goal for retirement. The business model is changing, but not enough advisors are changing with it.
One of my favorite stories of late was the client who called me after they were in a car accident. The client told me that they did not know where to start the process. We talked through where to send the car for repair, how to secure a rental car with the help of insurance, and how to not rush to make any decisions on a new car until the process played out. Months later this client expressed to me how grateful they were to have someone on their side of the table to talk to. I always tell my clients, if it involves your money and you need help, give me a call.
If you currently have an advisor who looks out for your best interest, and helps you with all things financial in your life, good for you. There are lots of us out there. Unfortunately, there are lots of bad ones out there too. If you have an advisor who sold you insurance or mutual funds one time, then I would say you don’t really have an advisor. If you have an advisor who only talks to you about your “investments,” then you have an Investment Manager, not a financial advisor. As long as you know what you have, and you are satisfied with it, then you are all set. My hope is that someday the financial advisors of the world are just that…someone who advises you on all your finances with your best interest in mind.
