Satisfaction Guaranteed?

Surprisingly, the SEC said yes. Some in the advisor community say the fact that firms are willing to offer a money-back guarantee shows just how competitive the industry has become. Neal Solomon, managing director of WealthPro in Gloversville, New York, says the money-back guarantee tactic is most assuredly “competition driven,” but he doubts “true” financial planners will participate in such a “marketing game.” It will be the “mid-sized institutions seeking to gather assets quickly” who will gravitate toward this approach, he predicts.

Solomon finds the ruling troubling. “I hate to introduce the word(s) ‘guarantee’ or ‘money-back guarantee’ to any investment program,” he says. The “concept of providing a money-back guarantee for a professional service will diminish the perceived value of the advisory work not only in the first year, but permanently.”