An Advisor Reveals His True Colors
“Guarding Your Wealth” is a nationally syndicated weekly personal finance column written by Jeffrey D. Voudrie, CFP. Mr. Voudrie is the President of Legacy Planning Group, a private wealth management firm that employs sophisticated proprietary strategies designed to protect and grow its clients' investments. Please visit our website, www.guardingyourwealth.com to read past articles in our archive.
(PRWEB) June 20, 2005 -- The vast majority of the financial services industry
does not have your best interests at heart. It is more concerned about the money
it makes, not the returns investors receive. Read on to hear what an agent
himself has to say—it may shock you.
When you work in the brokerage,
financial planning and insurance industries, it is all about sales. The
training, the incentives and the pay structure are all designed to motivate the
advisor to SELL. Their success in the industry is not based on how well their
clients do, but on how much commission is generated.
I’m not against
people making money. The workman is worthy of his wages. The problem is that
it’s the individual investor who turns to the industry for help that ends up
paying the price. Investors need to be skeptical and cynical when dealing with
an advisor—especially one that is paid on commission. Reading actual quotes from
an advisor’s email I received will give you an insider’s look into the industry.
The financial industry attracts those that are good at selling and want
to make a lot of money. This advisor who emailed me calls himself “very
aggressive” and a “grey haired 34-year old hustler.” “I’m a natural sales whiz
and have found this biz very easy to succeed in. I’ve never made less than
$200,000 in commissions [per year] since entering the biz 4 years ago.” Believe
it or not, he was saying these things trying to impress me!
Here are his
comments about Equity-Indexed Annuities (EIAs)—an investment that I have been
warning investors about for over a year. “I have only been selling EIAs because
I am not full of [investment] options.” In other words, it is one of the only
‘investments’ he can offer.
“I am more than happy to get $50,000
[invested by a client] all day long at 10% commission.” The agent makes $5,000 a
pop. What’s the client make? Who cares! He goes on, “I realize there is a better
way for …my clients.”
“Have I thought EIAs may not be as great as other
alternatives? YES. [his emphasis] Obviously, if I get 12% commission it comes
from somewhere and it’s not the carrier.” The clients of this ‘advisor’ don’t
realize his true motivation. They expect him to be knowledgeable and have access
to a broad range of products, but he isn’t and he doesn’t.
How does this
affect you? This could be the advisor that you are talking to! This could be the
advisor that was such a great speaker at that free seminar you attended. This
could be someone you thought was a financial genius when in reality all that
he/she has done is learned a good sales pitch!
Most advisors aren’t as
open about their motivations as this one was. Some advisors sincerely believe
that equity-indexed annuities are a great investment. Only God knows how much
their opinion stems from the outlandish commissions they’ll receive.
Not
all advisors are like this. There are some that are willing to take a stand and
do what is in the client’s best interest even when it means the advisor will
make less money. They realize they can’t accomplish this working within a
commission-based compensation structure.
They’ve left the big brokerage
firms and work for themselves. This gives them freedom and control over the
recommendations they make because their job security isn’t based on meeting
sales production requirements. These advisors are paid a fee for their services
instead of a commission.
By the way, it takes a fee-based advisor 7-10
years to make what the commission-based advisor makes off an investor in 10
minutes. The only way the fee-based advisor can do that is by keeping YOU
satisfied. If you aren’t then you won’t continue to use his/her services. If
commission-based brokers’ compensation was tied to their performance most of
them would go hungry!
In the next article I will share an email I
received from another advisor. You’ll be surprised at what he did to satisfy his
conscience! I’ll also provide a list of questions that you should ask any
advisor you are working with that will decrease your chances of being an easy
‘mark’ for a financial salesperson.
Have a financial question? I’ll
personally answer it. Go to www.guardingyourwealth.com and click on ‘Ask Jeff’.
In
addition to being a nationally syndicated columnist and Certified Financial
Planning Practitioner, Mr. Voudrie provides personal, private money management
services to clients nationwide.
Looking for an energetic expert who is
passionate about financial and wealth management? Mr. Voudrie is an excellent
speaker who will excite and inspire your audience. Mr. Voudrie is available for
a limited number of speaking engagements, television appearances and radio talk
shows. For booking information, email e-mail protected from spam
bots.
Related Articles can be found at www.guardingyourwealth.com under the Guarding Your Wealth
Article Archive:
Equity Indexed Annuities: There Are Better Growth
Alternatives
Equity Indexed Annuities: There Are Better Alternatives
(Stability)
Better Alternatives Than Equity Indexed Annuities
Equity
Indexed Annuities: Agents Prey On Unsuspecting
Consumer Alert: Equity Index
Annuities
# # #
Source : http://www.prweb.com/releases/2005/6/prweb252634.htm