Courtesy of Morton Brown Family Wealth
It should be clear, but it isn’t.
When I attend networking events, it seems that everyone has “Financial Advisor” written somewhere on their business card. Why? Because, as Willie Sutton supposedly said about why he robbed banks, “That’s where the money is.”
There is a false equivalence, though. A belief that because we all call ourselves something that we are all that thing.
There are differences between the actions of an advisor and those of a salesperson.
An advisor does/is:
■ Act as a fiduciary, at all times obligated to provide advice in your best interests. This is not true of the vast majority of people calling themselves “advisors,” unfortunately.
■ A Certified Financial Planner. If your advisor is not one, they should have one sitting next to them at your meetings. Academic credentials and expertise in all aspects of wealth should be table stakes in our industry but are not. We would not trust a lawyer without a law degree or a surgeon who dropped out of medical school, but people do entrust their money to someone best described as the “top salesman.”
■ Engaged. He or she has both hands on the wheel and shows up to do the hard work of planning, investing and staying informed. If someone has one foot in the business and one foot in retirement/golf/Florida, it may work for them, but it doesn’t work for the families they serve. It should be very clear how the advisor spends his or her time.
An advisor does not/is not:
■ Focus on “production.” The best advisor practices are run like law or accounting firms, not sales organizations. An advisor should be measured on client outcomes, not how much product they sell. Top sales or president’s club are not the credentials of an advisor.
■ Have a passion for life insurance. If someone is passionate about any one of the tools at their disposal at the expense of the others, then they aren’t objective. This is especially true if their strongly held beliefs relate to a high commission product that disproportionately benefits them. A true advisor is passionate about the outcome and agnostic when it comes to the means.
■ Try to beat the market. If you want to hire someone to beat the market with their stock picks or complex products, great. It is difficult to do most times, impossible to do consistently, but people keep trying. All of the energy spent trying to beat the market takes away from the ability to be a true wealth manager.
■ Answer to the incentives of a bank or brokerage. In too many cases, the interests of the bank and brokerage come first. Stories abound recently about sales contests to open new accounts and sell loans to clients. Pay incentives, product offerings and business models are often aligned against the client. The brokers employed in these situations find themselves in a position similar to their clients: at the mercy of the parent company.