I recently had the privilege of serving on a media panel for the national education conference of a distinguished broker-dealer. The questions posed by the moderator were wide-ranging and included such perennial concerns as how advisors could build their business and the "tidal wave of opportunity" posed by current demographic trends.
Interestingly, when it came time for audience questions, advisors confined their remarks to the narrow topic of products -- specifically variable annuities and ETFs. I might have withheld comment on this except that still more recently, our managing editor Janet Levaux participated in a media panel at a similar conference and the exact same phenomenon occurred. Despite the range of subjects covered, it was discussion of these two products that got the biggest reaction.
In both instances, advisors reacted negatively to a perceived unfriendliness toward variable annuities and embrace of ETFs. Despite all the qualifying statements made -- I for one acknowledged that VAs are at times ideally suited to some client needs -- thunderous applause for the questioner signaled that many in the audience felt under attack.
No panelists were tarred and feathered, and many advisors expressed appreciation for the exchange of ideas, but the experience deepened my awareness of the extent to which the media are from Mercury and advisors from Pluto. Even the most nuanced statements were misperceived because of the emotional freight embedded in words such as "abusive" and "expensive."
Financial advisors understand quite rightly that a product sale is freely arrived at in an open, competitive marketplace by consenting adults. The millions of customers clamoring for products that the media seem to sneer at can't all be wrong. Even the most attuned media Brahmins lack the perspective of the guy plying his trade on the street. Indeed, financial advisors often see the media as hostile, conformist dog-pilers.
At times, this stereotype is well-deserved. But the best of the media are looking out for their readers by offering a broader view of their industry than the day-to-day work of a financial advisor allows. We can see that rosy numbers touting VA sales mask a sharp decline in new money or that VA sales constitute a large portion of NASD disciplinary fines. We also know of leading-edge advisors who earn incredible livings putting a wrap fee on ETFs, knowing full well that these products shunned by some advisors can be an easy sell to investors basking in the light of their halos.
Members of the media and financial advisors need to talk with each other, not past each other. The former could be a little more sensitive to just how tough it is to earn a living in this competitive business. And the latter, if they would let down their guard a little bit, would find that the broader perspective of outside experts in their field can stimulate creative ideas they might not come to on their own.
Gil Weinreich, Editor