There are numerous reasons why an individual chooses one career path over another. Occasionally we hear of the youngster who wants to be a doctor or policeman when they grow up, but I don’t ever recall hearing a child aspire to be a financial advisor. So most people choosing an advisory career do so as young adults. The question is this: What kind of advisor do you want to be?
A client sees what’s on the outside and may occasionally catch a glimpse of the inner advisor. Although the inner self creates our behavior, a disconnect often occurs when we act in a manner which is inconsistent with our values. For example, consider an advisor who is not internally motivated by greed who is placed under a manager who is trying to get every last ounce of production from the advisors in his branch. This pressure to produce may cause the advisor to cut corners, focus exclusively on selling product or conduct himself in a manner which is contrary to his values. In this case, he will either conform or resist and perhaps leave his employer. Following are the two basic types of advisors as I see it.
The Ideologue and the Materialist
Everyone has an ideology, a system of beliefs and ideals, and thus could be considered an ideologist. However, to my mind this classification requires a strong emotional belief in a particular cause to be thought of as ideological. I consider myself an ideologist because I hold certain beliefs which have been adopted over the years due to a number of factors.
In the field of financial services I hold a strong belief that all advisors should be held to a high but reasonable standard. I believe we should always be honest with our clients and nothing should be more important than doing what’s best for those we serve. I know there are numerous like-minded advisors out there.
Individuals with a strong desire to serve others and an ethical compass which points true north can do very well as an advisor, assuming adequate level of competence and a good work ethic.
We all know what materialism means. However, in this context, I’m defining as a materialist an advisor who joins the profession solely because he feels he can make a lot of money. In other words, money is the primary focus and the client’s needs come second. This is true for many advisors, even though few, if any, will admit this. There’s nothing wrong with having material possessions; to the contrary, money brings freedom and choice. The problem arises when money has become the primary focus, leading to sales of high-commission products and with clients coming out on the short end of the deal. While I agree that an advisor can make a good income, if the primary focus is on the money, compromise is close at hand.
In a perfect world, every advisor would be subject to a fiduciary standard and there would be a system in place to properly monitor and uncover all infractions of that standard. Unfortunately, this is my ideological (and idealistic) side coming out.
Clients must become increasingly aware of the two types of advisors so they can better protect themselves against unscrupulous advisors. As a final word, every profession has unethical practitioners. Although most advisors probably try and do the right thing, there are some who are more interested in themselves than the clients they are supposed to serve.
Thanks for reading and have a great week!