I love to learn and I believe this love has paid off for the select clients our firm choses to work with. I frequently block time into my schedule for education on the financial industry, consumer issues, the economy, and other timely subjects my clients need to be aware of. Recently, I read an article from a Kansas newspaper that was talking about a company that was selling magazines and books door to door. One of the main issues and complaints was that the salespeople did not have peddler’s permits and were a little too pushy.

This got me thinking about how many clients come into my office that have been peddled a variable annuity, but have no idea what they have put their money in to. In this situation, I do not blame the salespeople. I believe there are three reasons the peddler at your door wants you to buy a variable annuity.

Reason #1: Today the test, tomorrow the sale

I began my working career as a youngster after my father experienced trouble with the business he had started to spend more time with my sister and I. He created a very successful medical equipment sales company, but regulation changed and put a big squeeze on the hospitals. Because of this one change, our family went through a very hard time. I went to work as a stable boy to help add to the household income. From there I kept pursuing better opportunities and in my final year of high school I began working for a very large furniture company and later went on to manage the wholesale division. Why do I bring this up? Because when I began looking for opportunities to display my abilities in the financial world, I realized something very quickly that shocked me: getting into the financial world was the easiest path imaginable. It amazed me how many companies would help me take a test to sell variable annuities, give me a brochure once I passed and then give me names to go see and sell this thing to. This is, unfortunately, far too often the norm in this world. After speaking to the hundreds of advisors I’ve coached, I realized many advisors have entered this business in that fashion. I am very grateful I avoided those avenues to enter the world of advising clients on their finances.

Reason # 2: Just because I don’t understand it, doesn’t mean you shouldn’t have it

I have often met with advisors who have told me they give everyone a variable annuity. While I do believe a variable annuity can fit for some people at the right time, I never argue with them. Instead, I ask them to sell me one in a role play-type fashion. I am amazed by how so few understand their plan or the company they are presenting. This is often repeated when the clients of these advisors ask me to educate them on what they have. Their eyes are wide open and they are taking notes furiously as we go through what they have line by line. I often hear, “How do you know all of this and you had no time to prepare before I got here?” This is unfortunately repeated over and over again because advisors are in a world where their managers do not care how much they know but how many people they see each day. It’s because of pressure like this that forces well-meaning advisors to sell investments they don’t understand.

Reason # 3: If it’s OK for you, it’s great for me

The most dangerous truth in the investment sales and advice world is that the vast majority of advisors present investments and advice that is “OK” for their clients. This is called suitability, which roughly means as long as what an advisor gives a client is not obviously going to destroy the client, the advisor is in the clear. I created my company to do the exact opposite of this excuse, which is to follow a fiduciary standard or “what’s obviously best” for the client. There are also advisors who chose to bounce back and forth depending on what is best for them at the moment. It is because of this decision that “the peddler at your door wants you to buy a variable annuity.”

My advice to any consumer is sit down with an advisor who chooses to follow a standard that always puts your interest first and has access to every financial product and tool available to help your financial plan succeed.

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