I received a lot of feedback on my Anthem article, and the response was interesting. Much of the negative feedback came on Twitter, mostly from young ex-brokers – and you will see in a minute why I’m not particularly surprised by that. By email and in the AP Viewpoint discussion, I received mostly positive comments, people telling me that it was about time somebody called out the drift in our culture from professionalism and planning to asset gathering and fancy investing.
I need to offer some corrections. Some asked whether I had attended the Wealth/Stack conference that I referenced as evidence of an increasingly asset-gathering mentality among people calling themselves financial planners. In the original column, I very clearly stated that I was simply responding to the topical makeup of the sessions – the titles that focused on fancy investing and building business empires.
From a financial standpoint, the raison d’etre of the conference seemed to be product companies in the exhibit hall and at the lectern asking the assembled advisors to use their sophisticated ETF products to gain an advantage and add return to client portfolios. (There were also a lot of tech presentations, and I have no problem with them.)
I also said that increasingly we are seeing certain celebrity empire builders show up at conference after conference as keynote speakers talking about how they had built very large firms – and I pointed out that none of them had the CFP designation. I referenced Ron Carson, who has built a coaching program and now a growing network of advisors. But it turns out that Mr. Carson has had his CFP since 1994 – so I apologize to readers and Mr. Carson for the error. A correction was made to the original article. I have long thought that Ron Carson was one of the most productive salespeople in the advisory space, the sort of person who can sit face-to-face with anyone and know, within a few seconds, how much money that person will make him.
The type of celebrity that conferences are choosing to speak – and that our professional attendees seem increasingly to be attracted to – concerns me because there should be a balance between self-interest and client-focus. Empire-builders, many of whom are not planners, seem to look at potential clients and instead of a person, they see a portfolio. My interpretation of the fiduciary standard is that it requires professionals to devote more than 50% of their loyalty to the needs of the client. With too many advisory firms, particularly the ones that have been actively recruiting ex-brokers or raking in clients via radio shows, the ratio tips strongly toward the firm and away from the client.
At the same time, our profession is being flooded with ex-brokers who seem to have a pure asset-gathering mentality while they present to the public as fee-only advisors. We are seeing a new kind of advisor: asset-gatherers who focus on client portfolios rather than planning strategies, who blog only about the markets and show up on TV talking knowingly about this or that IPO or corporate scandal. They are undeniably sophisticated managers of client portfolios, and sometimes they deliver a helpful, calming message during market storms. But as they become more visible, the focus of our collective attention moves from financial planning to portfolio strategies, which I doubt, through the next bear market, are going to add a ton of value to clients’ lives or net worth.
More damaging is that they are teaching the public that financial planning is about tending portfolios – exactly the message that some of us have been fighting against for years.
Whenever I speak at conferences these days, I poll the audience. “How many of you are extremely confident that you are adding alpha – that is, above-market returns – to your clients’ portfolios?”
As you can imagine, very few hands go up. Often nobody will raise a hand.
Then I ask: “How many of you are extremely confident that your planning work and ongoing advice and service is adding value to your clients’ lives?”
I have never talked to an audience where every hand didn’t go up.
“So where,” I ask, “should you be spending most of your time and energy?”
But as I said in the earlier article, my biggest problem is with the direction the trade press is going, where there’s breathless reporting of this or that office switching to this or that broker-dealer, where sales organizations are winning “broker-dealer of the year” awards and the sales culture is featured in annual BD surveys.
The conferences, the speakers we choose to stand on the podium and the organizations we report on in the media are pulling the profession away from the True Goal that we have been formulating and refining for 50 years: professionalism, on a status with doctors, lawyers and accountants.
Like those other professions, the emerging financial planning profession is not about building empires, tricky investment strategies or sales. It is fundamentally about tens of thousands of financial planners who are toiling diligently, privately on behalf of their clients.
If we could somehow turn our attention to the great work they’re doing, we will move ourselves a few steps forward toward that day that I look forward to, when, whenever somebody sees a person living a happy, fulfilled, prosperous life, the first question they ask is:
“Who is your financial planner?”
Bob Veres' Inside Information service is the best practice management, marketing, client service resource for financial services professionals. Check out his blog at: www.bobveres.com
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I received a lot of feedback on my Anthem article, and the response was interesting. Much of the negative feedback came on Twitter, mostly from young ex-brokers – and you will see in a minute why I’m not particularly surprised by that. By email and in the AP Viewpoint discussion, I received mostly positive comments, people telling me that it was about time somebody called out the drift in our culture from professionalism and planning to asset gathering and fancy investing.
