All financial advisors are crooks. Except me

Working in the financial industry has its pros and cons. And when I say “cons” I mean both drawbacks and shysters. At least that’s what I started to learn- or rather was taught. I was taught that all these so called “outdated white-haired insurance men” were just out to make a commission on vulnerable people who got tricked into paying for a financial product they didn’t need. But not me, I was going to be different. I was going to be sure I was never labeled a shyster. I was going to make a change to the industry and was not going to be a crook like all the other financial advisors. In reality what I have come to find working alongside many brokers, advisors, MGA’s, is in fact, the opposite. I have come to learn that there are not bad products but rather bad strategies. There are not a lot of shysters rather uninformed or poorly trained advisors.
For example, one popular insurance company does not sell permanent insurance. Permanent insurance does not exist in their core values and they do not offer it to their clients. Instead their core values reflect investing the difference in cost between term insurance and permanent insurance. For the most part I do see a lot of value in the theory. Does that plan work for everyone? For most it is a great place to start and will work if you stick to the strategy. But often people are victim of their own actions and habits. If you stray from that strategy you may be unhappy with the future results. Are they crooks for only selling a few products that fit most client needs? No.
The other end of the spectrum are individuals that have been under-trained in the products they sell. I encountered one company that only sold a handful of products and seemed to only want to offer Universal Life as the go-to insurance product for insurance and retirement savings. The product they were promoting was not a bad product. I’ve encountered similar Universal Life contracts used at corporate levels as tax advantageous strategies. The plan they had rudimentary pitched me using Universal Life would have not been as advantageous to me as an individual. Had they presented me with another permanent product like Whole Life using paid up additions, I would have been more receptive. Was the individual offering me this product a shyster? I don’t believe so. They seemed genuinely convinced that they were giving me a great product. When challenged about Whole life compared to Universal Life, or a simple buy term and in invest the difference strategy, you could see the advisor start to become uncomfortable around simple subjects. Again, I do not believe the adviser was a crook but rather an uninformed new salesman.
Let’s not forget the advantages and drawbacks of brokers over captive agents. When you’re a captive agent selling your product line, you only really need to know about six to ten products, how they work, who fits them the best, and what the limitations are. When you’re a broker you now have six to ten products for every company you can represent. If you comfortably represent ten major insurance carriers you’re looking at between sixty to one hundred products. That itself can be overwhelming. But a broker has far more advantages of aligning you with the best products on the market that suit your individual needs.

Maybe you have your own forged opinions about people who work in the insurance and investment industry. Maybe you’ve been taken advantage of by one agent and it took another agent to point it out. But what I really want to do in this article is to challenge that style of thinking and mentality. Look at the first example regarding non-permanent insurance. Say you have been sold a temporary life insurance policy with the strategy to be saving money at the same time so that one day you will be self insured. What happens if you stray from that strategy? Lease a new car instead of save for the future? One day your temporary insurance will come to a renewal and your premium will drastically increase to the point where you will not want to pay for it. You will not have saved enough or given compounding enough capital and time to become self insured. Does the fault rest on the adviser’s shoulders? It shouldn't, but often it is easier to blame someone else for the disappointment and frustrations in not following a plan.

Perspective is a beautiful thing when you have an open mind. In today’s world a lot of people look online at different products they hear about or see on an advertisement. We live in an information age where we have a lot of power to research products, strategies, and brokerage firms. Yet at the same time we want a microwavable savings and insurance plan that takes only minutes to heat up, sign, and file away. I think today there is a lack of respect in the client/advisor relationship and is often misunderstood. When I was under-informed in my early years, I was set on thinking that there were bad advisors doing wrong by clients. In contrast, often the relationship between advisors and clients has not been properly established. When this happens, it can seem like a microwavable sales transaction that gets reheated annually. This not what you want in an advisor but a client is also responsible for fifty percent of the relationship. If you put a Monday morning effort in answering long term questions asked by your advisor, then expect Monday morning results in the future. Financial strategies do not take forty-five minutes to whip up answering six questions and a basic risk tolerance questionnaire. If it did then robo-advisors would dominate the industry.

Don’t get me wrong, as an advisor I believe in mastering my craft and having a lot of knowledge on product and strategy. Which I will expand on in another article, but as we have witnessed TD Bank at the center of a large trust losing, high pressure sales tactic fiasco, others in financial services have lost trust with individuals as well. Are ALL employees at TD bank or other dominant banking institutions vultures preying on customers? Not at all. Are there some people inside these financial institutions driven by sales and pressure tactics? Absolutely. Sometimes pushed to unethical practices to attain audacious goals. But it would not be fair to paint the entire industry with the wrong color brush for the sake of a few individuals who have not been ethical. Banks have a purpose, Credit Unions have a purpose, brokers have a purpose. A large disadvantage to consumers when paired with an advisor from a financial institution is the prediction on weather or not the advisor will maintain their ethical standards throughout your business relationship. I really prefer to become friends with clients. It helps build the trust and relationship needed to take a financial plan to the next level. I firmly believe in the words of Don Connelly "I want to be there when there is nothing left to sell". I believe that is a very fundamental way to tell if your financial advisor really does have your best interest in mind. When your advisor is a friend, you are far less likely to be taken advantage of.