pany wholesalers call themselves “doctors.”
Whenever I bring this up, I hear from commissioned salespeople who
ask me why I hate them. I’ve actually had people come up to me after I’ve
given a speech with fire in their eyes. I’ll sit in the back of the room and ask
some earnest questions: Selling good investment and insurance products
is an honorable profession, is it not? You believe in what you’re selling,
don’t you? Are you ripping off your customers? Well then, why do you
need to label yourself a financial planner?
Here’s what they typically come around to saying: Many consumers have had bad experiences with bad commissioned salespeople, and
I don’t want my own reputation to be associated with those problems.
And, yes, many of those harmful folks are now calling themselves financial planners. They’ve fouled one nest; now they’re fouling another. These
conversations make my case better than any dialogue I’ve ever had with
I hope we don’t ever define ‘real’ planning
so precisely that we squelch the creativity
of the advisor community.
The public is so confused about financial planning. People think the service
is about managing assets. How do we educate them?
Years ago, if you said “financial planner,” a random person on the street
would word-associate: “life insurance agent.” Then it was “tax shelter
salesman.” Now it’s “asset manager.” That tells me the public takes its cue
directly from the profession.
If the majority of the people with “financial planner” on their business
cards are doing something different, that’s what the public will think the
profession does. If everybody who calls himself or herself a planner actually did planning, the public would catch on pretty quickly.
But I also think advisors need to shift their communication from
“Here’s what I do” to “Here’s the benefit to you if you work with me.” The
only way I know to do that is tell stories. Redact the names, of course, but
tell success stories about clients who came to you with interesting challenges — and who, after working with you, are now on the path to success.
Those stories are not about how you helped somebody achieve a 1% additional return on his investment portfolio; they’re about real-life situations,
which are inherently more compelling.
How would we enforce the distinction between real planners and people who
are misapplying the term for marketing or other purposes?
I think you can arrive at the best way to enforce it by exploring the other
options. Should we rely on people who are posing as planners to stop if we
ask them nicely? Is there a voluntary way to make it happen? Probably not.
define financial planning and then create laws
that prevent others from using the term? I don’t
know about you, but I distrust the process. If lawmakers propose something in Congress, the brokerage industry will be handing over large bags
of cash and dictating how they want that definition to be written. Pretty soon the people I would
consider to be “real” financial planners would be
prohibited from using the term, unless they were
selling toxic mortgage pools or gathering assets
for their wirehouse.
Somewhere in the middle, I can envision a professional organization that would only allow people to become members if its credential-checking
staff is satisfied that they are doing real financial
planning. Doctors belong to the AMA. Lawyers
register with the bar. Planners would register with
this organization — and if you’re not a member,
then the public has the right to presume that
you’re not a real financial planner.
This could be a subset of an existing membership organization like NAPFA or the Financial
Planning Association; in fact, the American Institute of Certified Public Accountants has a section
devoted to people who offer personal financial
planning, which could be expanded or serve as a
model. Or the profession could form a new organization entirely.
Wouldn’t that exclude a lot of great people?
Yes, absolutely. But all professions are, by definition, exclusive. And hey, those who are not planners are free to form their own organizations: one
for professional asset managers, another for those
professional salespeople who are not fouling anybody’s nest. And maybe those who don’t qualify
for these groups can form their own umbrella
organization. I’ll even throw out a catchy working
title: The IAPIABWTITIPTCIF, The International
Association of People in the Investment Advice
Business Who Think It’s a Terrible Idea to Put
Their Clients’ Interests First. FP
Bob Veres, a Financial Planning columnist,
publishes the Inside Information newsletter
and website for advisors at bobveres.com.
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