It’s no secret that the financial industry is at a crossroads. Traditional business methods and tactics are slowly being pushed out by a new, consumer friendly approach.
However, not so fast—the old model is still ingrained in our psyches and our lives: Sales people selling stocks, bonds, mutual funds, wrap accounts, insurance products and annuities. It seems you cannot read a magazine or watch a TV show without a financial company tugging at your heartstrings by telling you how much they care.
While these financial companies invest billions of dollars into advertising their way into your consciousness, the results only ensure enrichment for the institutions. You must ask yourself: Are you better off for the purchases of these products, better for the experience, and better off overall?
Research has demonstrated that the stock pickers and market timers, after costs, rarely outperform their benchmarks. With that statement being generally accepted as truth, we can easily conclude that it is not smart to take advice from anyone with a built in conflict of interest. In other words, if they are enriched when you buy their product, stay far, far away. In 2017, we have a vast amount of available information to make better choices. Don’t work with someone who only benefits when you buy.
The new model of financial advice offers consumers the ability to obtain unbiased financial advice as it pertains to areas such as Cash Flow and Budgeting, Risk Management, Investments, Retirement, College Planning, Estate Planning and Tax Planning—without having to buy a product in exchange. Let’s face it, your life goals should not be held in the precarious grasp of companies more interested in their revenue than your financial dreams.
This model, which is being increasingly offered by Fee-Only Financial Planners, is based on a retainer model that places the value where it belongs: On advice, rather than on product sales. Fee-Only advisors must adhere to the fiduciary standard, which means they must act in the clients’ best interest. In addition, they are required to disclose any and all conflicts of interest, present or potential; providing consumers with a better chance of obtaining meaningful advice geared specifically towards their needs—without a fear of being “sold” a particular investment or financial product.
At a recent networking event, I had the opportunity to speak with several people who asked about what I do professionally. After explaining our process and practice, I received the following comments:
“I never knew anyone like you existed.”
“That makes so much sense. Why would any consumer work with someone who didn’t work this way?”
“Why don’t people know about this?”
The questions were good, thoughtful, curious, smart. The unfortunate truth is that most people don’t know Fee-Only Advisors exist. We represent a tiny sliver of the financial services world and we don’t pump billions of dollars into advertising, sponsoring sporting events or placing substantial ads in major papers and magazines. We don’t have celebrity spokespeople. In fact, we are precluded from using endorsements of any kind!
The information age has brought us wonderful and rich resources to help us know more and live better lives. By remaining shackled by old, out-of-date mentalities and resources, you lose the opportunity to feel more comfortable and confident with your money life. You run the risk of remaining stuck in a model that is based on buying a commoditized product from someone enriched by making the sale, instead of receiving objective, unbiased advice.
Why would anyone want to work that way? You can do better.