Have financial advisers changed their behaviour?

There are days when I breathe a sigh of relief. Days when I find reasons to take heart in the financial services industry. Today was one of those days. I spent the morning with a small group of some really good financial planners. They talk sense and certainly convey the impression that they do what they say. I know that my industry is full of some very good salespeople, so sometimes deciphering the fact from fiction is not easy and I’m not going to pretend that I have mastered the art of doing so, but some days, I get a sense that if all advisers were like this, there would be little need for a regulator or compensation system. Sadly, history gives the regulator good reason to be concerned. So I admit, it isn’t always easy to tell if financial advisers aren’t simply on their best behaviour, but some days – well, you just know it isn’t faked.

Small fish in a small pond?

Now its true that I attend events that probably only the better financial planners go to, so I do tend to meet some very good people within the “industry”. I haven’t met everyone and I haven’t met some of the most well-known, but I can say that the days of being embarrassed by my peers are largely long gone. Indeed many are inspirational, encouraging and willing to help me to build a better business and serve my clients even better.

Isn’t it terrible….

This flies directly in the face of stories I read in my trade press “pinks” that highlight FSA fines, advisers being imprisoned and generally outlining the “dark side” of financial services. Trust is a big deal and something that has to be earned and is very difficult to measure. So I was heartened to read in “The Behavior Gap” (American) by Carl Richards a delightfully honest take on conflicts of interest. Something that I have blogged about before, but not sure that I have conveyed terribly well. Here’s what Carl says:

“Here’s my take: conflicts of interest are inherent in almost any situation when you’re paying for advice. Lawyers, accountants, financial advisors, auto-mechanics…we all have to cope with situations when our interests may not fully align with the interests of our clients, at least in the short run“.

Chapter 8: You’re Responsible For Your Own Behavior, The Behavior Gap, Carl Richards Published by the Penguin Group 2012.

Something about reaping and sowing…

Carl goes on to make some great points, but he doesn’t fudge the issue. In a world where advisers are generally paid to invest money, it is no surprise that they attempt to control it and perhaps attempt to grow it in a way that doesn’t suit the client, or could be used more thoughtfully (such as clearing debt or giving it away). You only find out what your adviser will do when you get to such a point. My approach is to clear debt first as I hope is obvious from the website. This is because of my beliefs about good financial planning, which means that many people are not able to invest with me until this has been done. This is very much to my short-term detriment, but I believe that it is absolutely in the best interests of my clients – and those that are not able to be clients.

Holding onto principles

This cropped up again this week. An email from a prospective client asking for help which essentially wanted to know how to make a little bit of money into a lot more money over 3 years. This is not what I do. It is also not what I believe to be good for anyone except those that really are able to gamble without damaging their own security. The email wasn’t from a place of greed, but a place of speed and sadly some things simply take time, which is true of good financial planning as well, it takes time – and time as we all know, costs money.