Financial advisors, stop pretending you know all
Posted December 10, 2009on:
Who are we? That’s the question many financial advisors have been asking themselves. I agree with Carl Richards when he says financial advisors have an identity crisis. Are we looking in the mirror each morning wondering who we are? Maybe not, but we do have a problem.
Let’s Confuse ‘Em
There are many so-called “financial advisors” that simply want to sell clients expensive products; and one of the ways to do that is to confuse the customer. Now, financial firms don’t actually have an official Customer Confusion Department, but they might as well have one. Case in point: We call ourselves “fee-only” advisors, hoping to differentiate from product pushers on commission; pretty soon, they re-brand themselves as “fee-based” advisors. How many people can actually tell the difference between a “fee-only” advisor and a “fee-based” one?
My Crystal Ball Is Better Than Your Crystal Ball
The financial media perpetuates the myth of financial advisor as prophet of the market. The other day, I caught a five-minute segment on CNBC. Maria Bartiromo was interviewing a couple of financial advisors. “What do you see the market doing, going forward?” she said. “Where should I put my money?” The two guests fell over themselves trying to out-smart each other. By the way, no palm-reading or crystal balls were in evidence on the show, just talk. The message here was: I can see the future better than you. Once we start down the road, pretty soon we join the rank of fortunetellers (or fortune sellers.) What would be an alternative? How about just telling the truth
I Don’t Know
These three words are certainly not for those financial advisors who aspire for five minutes of fame with Ms. Bartiromo, but that’s how I deal with my own identity crisis.
When people ask me what I do for a living, I tell them I’m a diaper changer. I have a 15-month-old. I know about such things. This usually elicits a laugh and allows the conversation to continue more lightheartedly. When pressed for information about the future of the market, I just say I don’t know. But I give two pieces of advice: tune out the media, and don’t expect a financial advisor–or anyone else–to be able to predict the future.
We are not fortunetellers.
(Reposted from my contributions to Morningstar Advisor.)