The headline on this article may be a little misleading. The numbers may be off in regards to how many financial advisers deserve to lose their jobs.
My mistake. I apologize. I live and work in a world of math so how could I get the headline wrong?
The correct number should read 99 percent of advisers deserve to lose their jobs!!! For too long advisers have been getting wealthy off the exploitation of the exact clients they are supposed to be helping.
It's almost like when you hire a plumber to fix a plumbing problem and they end up creating more problems. There’s nothing worse than saying, "Wow, if I hadn't even called that plumber my plumbing problems wouldn't be as bad."
That is essentially what happens to most clients when their financial adviser stumbles in to their lives. The siren song of high earnings has driven many an individual to don the cap of a financial adviser. Most of these people should be selling vacuum cleaners but instead they are selling financial products because the pay outs are better.
What has happened is that a misalignment of incentives has become ubiquitous in the financial-services industry, pitting the interests of advisers against the interests of the people they are paid to supposedly help. Too many high-priced products are sold, too many poor decisions are made, and fees are just too dang high.
Hedge funds are the perfect example of how our industry has gone terribly wrong. High fees and low returns. How does that possibly work? How do clients ever fall for that?
Well, to paraphrase Warren Buffet, the products available to you as your wealth grows do not get better, but what does get better is the sales capabilities of the people trying to sell you these high-cost and low-return investments.
Luckily, as information becomes more readily available and articles highlight the impropriety of the financial services industry, the consuming public is starting to understand what to look out for.
With these above grievances aired, it presents even more opportunity for the 1 percent of advisers to keep their jobs. It is nothing special that they do that makes them great advisers; it’s just that your average adviser and your average firm are doing things so terribly.
What are the key elements to being a good adviser or what are the questions clients should ask to determine if their adviser is a good one?
Are you a fiduciary on my account? What are your all-in fees? And what is your investment-management philosophy?
Essentially you are asking: Are your incentives lined up with mine? Are you ripping me off? And do you know what you are doing?
These don’t seem like unfair questions to ask.
Andrew Denney, founder and CEO of Prosperity Financial Group (www.pfgmidwest.com), has more than 13 years’ experience in the finance industry, where he advises clients in such areas as retirement planning, asset protection, estate planning and wealth management. Denney holds Series 7 and Series 66 securities registrations with LPL Financial, in addition to a life insurance license. He has a degree in finance from Missouri State University.
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