Tag Archives: Sales Representatives

The Compensation Methods of Financial Advisors Matter a Lot!

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The Compensation Methods of Financial Advisors Matter a Lot!Savvy investors do not buy investment products from sales representatives (reps). They select “real” financial advisors who have the specialized expertise and services they need to help them achieve their financial goals. This is a far cry from reps who want to sell mutual fund products that pay 5% commissions. Regardless of what reps say in their sales pitches, astute investors should know reps, who are paid at the time of the sale, have no economic incentive to help them achieve their financial goals.

If you are a savvy investor you should pay fees to a financial advisor for his knowledge, advice, and services. If you become dissatisfied with the advisor’s results you can terminate the relationship and the advisor’s compensation stops. This is a powerful incentive that motivates advisors to help you achieve your goals.  Continue reading →

Why Do Financial Advisors Resist Accountability?

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Financial Advisors and AccountabilityFinancial advisors are responsible for helping investors achieve their financial goals. They help them develop financial plans and investment strategy. They help them determine allocations to the various asset classes. They help them select money managers. And, they provide performance reports that document monthly or quarterly investment results.

What if advisors do not provide these services? There is a 95% probability the “advisor” is really a “sales representative” who is paid commissions to sell investment and insurance products. Their responsibilities stop when investors sign their contracts. The advisors’ next steps are collecting their commissions and moving on to the next sale. These advisors are clearly not accountable for results because they have already been paid and do not provide ongoing services. This is the number one reason why investors should not rely on sales reps to help them invest their assets – no accountability. Continue reading →

5 Reasons You Want an Advisor Who is an Acknowledged Financial Fiduciary

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Wall Street does not want you to know there are two primary types of people who sell financial advice and services. One is a sales representative (rep) who is limited to selling investment products for commissions. The other is an advisor who provides financial advice and ongoing services for fees. Wall Street knows you do not want sales reps handling your assets, so it does everything it can to obscure the key differences between reps and advisors.

You can avoid many of Wall Street’s shadiest business practices if you select a professional who is a financial fiduciary. Following are five reasons why this is true. Continue reading →

Financial Advisor Titles are Confusing

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One of the most frequent requests we receive from investors is asking us to describe the key differences between titles that are used by financial advisors and representatives.

As background, these titles are confusing because the financial service industry wants them to be confusing. Lower quality advisors are more productive when they blur distinctions between themselves and higher quality advisors. If lower quality advisors told the truth you would not buy from them.

Financial Planners – CFPs are best. They provide financial, retirement, college, and estate planning services. Be aware anyone can call themselves a planner whether they have the specialized knowledge or not. A high percentage of insurance agents call themselves planners to lower sales resistance.

Financial Advisors – They provide a number of valuable services, for example asset allocation, manager selection, and performance reporting. They do not pick securities.

Money Managers – They make investment decisions when they make portfolio management decisions. Mutual funds, separate account managers, ETFs, and hedge funds are examples of money managers. They pick securities.

Sales Representatives – They sell investment and insurance products. They are paid commissions by third parties for sales results. Reps are most likely to misrepresent their actual role to reduce sales resistance. They get away with it because pitches are verbal and investors have not learned to require documentation. Investors should trust what they see, not what they hear.

I hope this helps. Its tough when reps have superior sales skills.