| |
Not all advisors are sales
hustlers. I also heard from someone who made a radical decision in
response to his experience in the financial services industry. Let’s
hope that other conscientious advisors don’t follow his example!
Last week I shared some real-life confessions of a typical financial
advisor. This self-proclaimed “aggressive, 34-year old [sales]
hustler” sells equity-indexed annuities almost exclusively. He can’t
resist the easy money and, even though he knows the investment is
better for him than his clients, he is unwilling to change his ways.
(Florida seniors watch out! This advisor might be the one trying to
sell you that equity-indexed annuity! Seniors all across the country
need to understand that advisors recommending these high-commission
products are very likely cut from the same cloth.)
I recently received an email from someone I’ll call John. He was
impressed by the information on my website (www.guardingyourwealth.com)
and had to tell me his story. “Thank you for shedding light on the
true conflicts involved in the sale of equity-indexed annuities.
Hopefully, this will drive change in legislation.” Interestingly, I
took part in a conference call with the Securities and Exchange
Commission on that topic a week later!
John started his financial services career in a very unusual way--he
actually got a college degree in finance! You might be shocked to
know that few advisors have a formal education in finance,
investments, or other money-related issues. Many don’t even have a
college degree. Their firms focus on teaching them how to sell.
John started out with a ‘financial planning company’, desiring and
expecting to help people manage their money and achieve their
financial goals. He quickly learned that the firm’s focus was quite
different. John says, “I found myself around people who were just
trying to figure out how to make money on a presentation.”
And what well-thought-out investment strategy were his co-workers
presenting? “Most were pushing variable annuities on every deal…and
not just for a small portion of the client’s overall portfolio,”
John says. “Needless to say, I did not feel comfortable and left the
company.”
John then decided to work for a CPA firm that was starting to offer
financial planning services to it’s client’s. He was confident his
experience would be different. But once again, that wasn’t the case.
“The owner was introduced to equity-indexed annuities in San Diego
from Allianz. Well, he saw the dollar signs [the potential he had to
make money] and hit the senior market.”
The opportunity to make a lot of money was too good to pass up and
the owner decided to push these products to seniors. Seniors who
came to the CPA firm because they trusted the CPA subjected to
advice that was colored by what was best for the firm. John recalls,
“I looked, examined, and looked again at these contracts and said
something is wrong. Who gets paid a 12% commission and the investor
receives a benefit?” Good question.
“I was really interested in doing financial planning as a profession
but just could not stomach these experiences.” Unfortunately, John
left the financial services industry all together. There are many
people graduating from college that have strong educational
backgrounds in financial planning. All too often their experiences
are similar to John’s and they leave the industry. That’s bad for
all investors.
There are advisors that you can trust. These advisors have chosen to
be paid by fees instead of commissions. As a result, it takes years
for them to earn through annual fees what commission-based advisors
make in one transaction. You only pay them for the period of time
you use their services. They only continue to make money by keeping
you happy—what a concept!
Typically, fee-based advisors don’t hold seminars or contact you by
phone to pitch the latest hot product. Most of the time, you have to
seek them out instead of the other way around. By the way, how often
are you contacted by reputable, experienced accountants or doctors
trying to sell their services? Why should it be different in the
financial services industry?
Do your research anytime an advisor recommends an investment,
especially if that advisor sought you out. Make an informed
decision, not a quick one.
Have a financial question? I’ll personally answer it. Go to
www.guardingyourwealth.com and click on ‘Ask Jeff’.
In addition to being a nationally syndicated columnist and Certified
Financial Planning Practitioner, Mr. Voudrie provides personal,
private money management services to clients nationwide. |
|
