Financial Advice

I opened my fledgling Financial Practice in the fall of 2007. As any entrepreneur will tell you, the first few years can be brutal. From trying to define my business model to best satisfy my target markets needs, to getting the word out through marketing trial and error, it’s been tough.

For many, the title of Financial Advisor or Financial Planner conjures up a vision of a salesman. And, by most accounts, this interpretation would be correct. The most successful “Financial Advisors” by industry standards are those that have amassed significant “assets under management”. For companies, assets represent revenue and commissions. The role of the broker is to bring assets to the firm. Those that bring in the most assets are touted as the best in class. Competition is fierce for these Advisors as Brokerages and Insurance Companies attempt to lure them away from the competition, enticing them with increased revenue sharing packages and huge sign on bonuses.

If you ask me, I think the broker model is flawed. With financial advice contingent on the sale of a product, clients aren’t getting the advice that they really need, advice that isn’t related to an investment or insurance product. Consequently, it’s no wonder that most folks are suspicious of brokers and insurance agents, A.K.A. Financial Advisors. Yet, even as other industries transition to a more transparent compensation structure, these financial firms cling fast to this form of compensation.

In efforts to separate myself from the public’s perception of this industry, I’ve opted for a fee based model. This means that my compensation is based on the needs of the client. A fee-only model enables me to work with anyone along the socioeconomic spectrum and additionally provides assurance that my values remain in line with those of the clients. (To date, I continue to be contacted by Financial Services firms and Insurance companies touting their compensation packages over the competitions. I have yet to receive an employment offer whose focus is on the client.) My services range from providing simple budgeting advice (charged at an hourly rate) to sophisticated portfolio management (charged on a percentage of assets). Now, the trick is overcoming the negative image created by my predecessors and which is perpetuated by many still within the industry. Until these folks clean up their acts, the going will be tough for the rest of us.