The financial services industry has a noble mission, one devoted to helping Americans save and invest for retirement. Even so, it sometimes gets a bad rap from the public.
The reason for this stems, in part, from the financial crisis. To this day, many regard those working in finance with suspicion. They conflate wealth management firms and financial advisors with the handful of institutions whose misdeeds nearly broke the global financial system in 2008.
The revelation of Bernard Madoff’s Ponzi scheme had a similar impact. His outrageous crimes likely caused countless hard-working, caring and honorable advisors to face unwarranted scrutiny over their motives.
Another factor is that many think getting financial advice is more expensive than it actually is. This distorts people’s view of the industry and dissuades them from considering working with an advisor.
As a result, we often find ourselves fighting public relations battles on multiple fronts – even though these issues are fed by misperceptions and misunderstandings. But it doesn’t stop there.
Firms sometimes engage in activities that, on the surface, sound bad – and could engender further negativity – but when you consider them more closely, they help to form the foundation of an excellent client-service experience. Here’s a sampling:
Cross-Selling
The issue here mostly has to do with jargon. The term does a disservice to the virtuous dynamic that often exists between firms, their affiliated businesses and end clients, suggesting advisors regularly push products on clients they may not need. Of course, in the era of Reg BI, advisors are required to act in their clients’ best interests. But beyond that, let’s consider the importance of insurance products.
It’s hard to think of anyone who doesn’t need some protection. Therefore, if an advisor recommends a particular solution for the right reasons and it fits a client need, it makes sense to work with an affiliated company to provide it. That’s not just selling. It’s good service.
Shining A Spotlight On Underperforming Advisors
At first glance, dismissing advisors on the lower end of the production scale may imply that the bottom line takes precedence over everything else. If there’s no effort to coach and provide them with the tools to succeed, that may be a valid criticism. In most instances, though, firms try to work with struggling advisors and provide them with everything they need to improve performance.
Yet, when that happens, and there’s little progress toward accentuating their strengths and addressing their weaknesses, it’s in everyone’s interest to move on – especially the clients’. An investor can suffer ruinous long-term consequences when their advisor is not at the top of their game.
Rewarding Top Producers
Few within the industry have issues with the concept of top-producer events. Indeed, most advisors not only accept the approach but appreciate when their peers who have successful businesses get rewarded. Nevertheless, from the outside looking in, such events may appear to incentivize advisors to boost their own numbers versus doing what’s right for clients. But, as alluded to above, today’s regulatory landscape includes rules designed to prevent that from happening.
Besides, the Venn diagram of the advisors who take great care of their clients and the ones who generate the most production is basically a circle. In other words, top producer often equates to best client-service provider.
Does the industry have some bad apples? Of course – and so does every other industry on the planet. Yet, it seems like financial services – which, at its core, is about helping others – collectively encounters criticism that others do not.
The fact is that advisors and their firms almost universally do everything they can to do right for their clients. More people should take notice.
Libet Anderson is President, Wealth Management, at Concourse Financial Group.
