Write about what makes you angry.
Sometimes I know what to write about, sometimes I don’t. A while back I heard someone advise that an easy way to get over “writers’ block” is to write about what makes you angry.
That stuck with me.
I am a calm sort of person, mostly. Sometimes my kids make me angry, sometimes (not often I promise) my husband makes me angry. I can get angry when listening to politicians (particularly the current breed). But what makes me angry more than anything is other financial advisors.
Not the good ones. I love the good ones. It’s the bad ones that make me mad.
And of that there are plenty.
I have banged this drum a few times before but please don’t assume that because someone holds the title ‘Financial Advisor, Wealth Advisor, Financial Planner’ or any version thereof that they:
a) have any idea what they are talking about or
b) have your best interests at heart.
I know that’s what you want to assume, because, well, that’s just what anyone would assume, but it’s not a safe assumption.
The law is partly to blame. Financial products (here and in North America) are regulated mostly on the basis of disclosure. It’s the principle of “caveat emptor” or “buyer beware”. A recent article in Morningstar titled ‘Don’t get hosed when buying financial products and services’ explains:
“You know those impenetrable documents of legalese that you have to “read” before signing your mortgage or buying stock? (My addition: or investment/savings product) Yup, that’s what passes for open and transparent disclosure of a product. If, after being offered the disclosure, you still sign the agreement and get hosed, then it’s caveat emptor, my friend. Caveat emptor.”
So that’s a problem. You as the client have to educate yourself. If you are being sold a product, you need to understand that you are being sold a product and you need to assess whether that is the right product for you.
Morningstar write in their article, “One of the ways you can beware when vetting financial advice is to have a clear understanding of how the person you are hiring gets paid. Knowing that can help you understand his financial incentive.”
The article goes on:
“Imagine walking into a clothing store where the salespeople earn a commission on everything you buy and saying, "I know nothing about clothes or style. Please just tell me what I should buy, and I'll take it." You would never do that! Not because the salespeople aren't good at what they do or don't deserve the commission--that's not the point. The point is that they are incentivized by the company that they work for to sell you the most expensive wardrobe you will accept. We all know this model. There's nothing wrong with it, but as a shopper you generally want to avoid leaving the bulk of your decision in the hands of someone who has that kind of incentive. If your goal is to get a good wardrobe at a decent price, you shouldn't leave 100% of the decision in the hands of the salesperson. It's just not smart. The same thing goes for financial products and services.”
You also need to understand that if you are being sold a product you are being sold a product by a salesperson. Advice and sales are two very different things. The problem, as Morningstar points out, is that it can be hard to tell whether someone is a salesperson or a serviceperson, and sometimes one person will play both roles.
“For example, when you visit the doctor and he diagnoses your illness, that’s a service. If he then suggests that you buy a particular brand of medicine, that’s a product. If you knew that the doctor received a commission if you buy the drug, would you weigh the advice differently?”
In the spirit of full disclosure Liberty Wealth doesn’t get paid a commission to sell anything. We are strictly service and not sales (in the industry we call it ‘fee-only’). But, I used to be both. I saw that world, and it wasn’t pretty. I knew that my clients were relying on my honesty and integrity to recommend the right thing for them. But perverse incentives eat away at you over time and I left that side of the industry disillusioned (to say the very least).
Now I get angry when I hear of people ‘getting hosed’ by financial salespeople who are aggressive and who have a distorted view of the truth (I hear stories regularly). In 2019 high pressure sales tactics are not ok (they were never ok).
You should never feel pressured into signing any agreement particularly one that involves handing over your hard-earned money.
These sales tactic happen everywhere, but it’s particularly bad in the offshore world where regulations are less stringent and expats in particular have little protection.
Sadly, it will continue for a long as people are incentivised to sell. In the UK St James Place have recently been under the spotlight as their sales incentives have been uncovered. Guess who pays for the fancy holidays that the advisors are treated to if they meet their sales targets? You, the client.
Remember, you can always get a second opinion on what you are doing with your money. You are never stuck where you are. You always have options.
You know where I am.