When I first got started in the financial services industry I wanted to venture out on my own and learn the business. I thought to myself, “it can’t be too hard to bring on new clients, can it? After all, look at all of the impressive licenses that I have!”. So, at the ripe old age of 20, fresh out of college, and newly married, I began my foray into the wonderful world of personal finance. My first hurdle was finding a company that would be willing to take a chance on me. It took several interviews but by the time I graduated college I had three job offers all of which extended to me by large life insurance companies. Of the three offers that I received, not one of them offered to pay me a salary because, after all, who is going to pay a 20-year-old kid to peddle insurance products to his 20 something friends? No, all of these offers were strictly on a commission basis.
Not knowing any better and being (perhaps overly) confident in my abilities, I took the offer that seemed to me to be the best. What happened in the year and a half that followed would forever change my perception of the industry and my place in it. I won’t get into all of the messy details but suffice it to say that I was shown the ugly, sleezy side of our business in ways that I hope to never see again. As I mentioned above, my compensation in this position was entirely by way of commission. I only got paid if I sold insurance products (that is, if it was enough to cover my office rent for the month). I was told many times by the General Agent and Sales Managers that in this position you only get to “eat what you kill”. This seemed simple enough to me. All I had to do was work hard, sell life insurance, and get paid. However, as in most things in life, this was easier said than done. After a year of working my tail off and making just enough money to scrape by (when combined with my wife’s part-time Nurse Tech pay while in school) I submitted my letter of resignation. I still remember writing out a large check on my last day in order to pay off my debt to the company allowing me to use a cubicle and a parking space.
Despite how this might sound, I actually do not regret this experience in the slightest. It showed me exactly the thing that I never want to become: a middleman. You see, at this first stage in my career I was not yet an advisor. Sure, I spent time talking to people about their families, their careers, and their hopes and dreams. However, it was always with one goal in mind, “how can I spin this conversation in order to sell more insurance?”. This is how I was trained to work from the first phone call all the way through to the closing appointment. I was given a tool box of sales training, client questionnaires, and back-office support but I was only given one tool, life insurance. It’s like the old saying says, “if all that you have is a hammer, every problem looks like a nail.”
This approach bothered me from the get go and I tried my best to incorporate true planning into my conversations with clients. However, I was neither equipped to do this planning nor was I given the support in order to do it effectively. The entire system was built in such a way that one could only succeed if they sold the firm’s preferred product and lots of it! I moved on from this first job and eventually found myself in a position to provide true financial planning to my clients with some of my favorite people in the world. Thus, Provisio Retirement Partners was born!
Why do I tell this story? It doesn’t exactly cast the early years of my career in a very good light. I am ok with that because it is a good lesson for all of us, client and advisor alike. While there are many phenomenal advisors in the world today, there are also a large number of “middlemen”. Salespeople who’s only goal in meeting with you is to direct you to a product or prebuilt model for which they will receive a commission or fee for little to no current or ongoing effort. This is the very definition of a middleman because, truth be told, the product or investment model that they are offering you is likely available to you by going directly to the source (i.e., the insurance or investment company). Therefore, you end up paying more to the middleman but end up with the exact same end result. This doesn’t even take into consideration whether or not the product or strategy proposed is right for your situation which should be brought into question if a middleman is involved.
By now you are probably wondering, “how can I tell the difference between an advisor and a middleman?” Here are five things that I would use as a litmus test for a true financial advisor:
- The advisor is independent; They are not required to sell their firm’s products and thus have the whole world of options available to them
- They are willing to give you advice regardless of your level of income or the size of your retirement accounts
- It is common for you to hear from them personally multiple times a year
- Your portfolio is not dominated by any single product but rather has a strategy of diversification
- The advisor is committed to education and spends time informing their clients on current events that affect them as well as providing them with opportunities to learn more; Has the heart of a teacher not a salesman
I hope that this week’s post is helpful for you as you wade through the sea of middlemen to find an advisor who truly cares about your financial wellbeing! In addition to the written format, this is also the first blog post to be recorded for audio as part of our new “A Wing and a Plan” podcast! We have recorded a few other blog posts from our archive but this is the first to be recorded in conjunction with the weekly post. If you would prefer to listen to our blog posts every week, subscribe to our new podcast which can be found on Spotify, Amazon Music, and iHeartRadio.
Now, I would be remiss if I did not include a song of the week. This week’s song is one that I recently found to be quite motivating! Enjoy!
The opinions voiced in this show blog are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision.