For the past 20 years as a Financial / Investment Advisor I have received advice on many different things, from FEE intensive portfolio analytics to building a strong Investment Firm. Some of it has been great advice from mentors with the utmost genuine integrity, and some has been from self proclaimed geniuses that have that sneaky “if its legal, its ok to do” attitude which is part of the “Stupid advice” category.
One of the biggest hurdles in owning an investment firm is separating your firm from the sleaziness associated with Wall Street and the investment industry. We have all seen the many instances that fuel this attitude. Those of us that pride ourselves in having a truly honorable firm have to fight this reputation daily. We can expound how honest and different we are, but this only adds to the skepticism.
Wisdom and common sense is key to conveying integrity.
When Financial/Investment Advisors change firms they usually have to go to the new firms training class. Most of this class pertains to SALES. Many sales tactics are presented. One in particular is “Dont sell against yourself”. If a prospective client walks into your office wanting a certain investment vehicle or strategy, dont risk the sale by suggesting something else. Sell the client what they want. This may be legal, but it doesnt make it right. Large sales production requirements for Financial Advisors can induce those Advisors to abide by this advice. We’ve all heard the addage, “The customer is always right”...well, not always. The truly good Financial Advisor isn’t afraid to lose the sale by giving the best advice. Sometimes advising that single Mother renting the seedy apartment to buy a home with the inheritance she just got, is the BEST advice, But as I was told, that advice doesnt help with my sales quota. Thus, another resignation.
I’ve been advised by various industry consultants wanting my business to have minimum account size requirements for new clients. Do smaller accounts really take that much time to manage? NO. For those of us that actually manage the accounts, rather than hand out mutual fund and annuity brochures, most of our analysis is valid for all account sizes, smaller accounts just have less to allocate in the model. And how do you know this small client won’t come into money in the future? Hey, if you’re a good Financial Advisor that gives more than just investments, maybe your input can help your client make a lot of money. And at the risk of sounding crazy to my former bosses, what about the good feeling it gives to just help people? I love that feeling.
Another example of stupid advice from the alleged experts is, “Discounting fees conveys you’re not confident in your services”. After over 20 years, I’m plenty confident in the services my firm provides, and my fees are half of the standard 1.5% per year. I met with an affluent person a few months ago that told me they don’t mind paying higher fees for excellent service. It was like they wanted to pay high fees in order to ‘feel’ like they were getting the best performance. This is the same psychology Large Wall Street firms use when they lease expensive offices with lavish entry ways and furnishings. Clients of these firms should realize that, not only are they paying for the opulence, but high fees are NOT an indicator of better performance or safety, and neither is expensive office space. Ironically, it shows how financially inept these firms are. How many of them were involved in the 2008 Financial crisis, and had to be bailed out? Stupidity
The average Investment Firm client changes Financial Advisors 3-4 times, costing them thousands of dollars before finding a good one for their situation. Take the time to interview as many as it takes from the start. Money saved is better than ANY investment return!
Steve J. Casull, CEO & Founder
Tuesday Mar 22 2016
For the past 20 years as a Financial / Investment Advisor I have received advice on many different things, from FEE intensive portfolio analytics to building a strong Investment Firm. Some of it has been great advice from mentors with the utmost genuine integrity, and some has been from self proclaimed geniuses that have that sneaky “if its legal, its ok to do” attitude which is part of the “Stupid advice” category.
One of the biggest hurdles in owning an investment firm is separating your firm from the sleaziness associated with Wall Street and the investment industry. We have all seen the many instances that fuel this attitude. Those of us that pride ourselves in having a truly honorable firm have to fight this reputation daily. We can expound how honest and different we are, but this only adds to the skepticism.
Wisdom and common sense is key to conveying integrity.
When Financial/Investment Advisors change firms they usually have to go to the new firms training class. Most of this class pertains to SALES. Many sales tactics are presented. One in particular is “Dont sell against yourself”. If a prospective client walks into your office wanting a certain investment vehicle or strategy, dont risk the sale by suggesting something else. Sell the client what they want. This may be legal, but it doesnt make it right. Large sales production requirements for Financial Advisors can induce those Advisors to abide by this advice. We’ve all heard the addage, “The customer is always right”...well, not always. The truly good Financial Advisor isn’t afraid to lose the sale by giving the best advice. Sometimes advising that single Mother renting the seedy apartment to buy a home with the inheritance she just got, is the BEST advice, But as I was told, that advice doesnt help with my sales quota. Thus, another resignation.
I’ve been advised by various industry consultants wanting my business to have minimum account size requirements for new clients. Do smaller accounts really take that much time to manage? NO. For those of us that actually manage the accounts, rather than hand out mutual fund and annuity brochures, most of our analysis is valid for all account sizes, smaller accounts just have less to allocate in the model. And how do you know this small client won’t come into money in the future? Hey, if you’re a good Financial Advisor that gives more than just investments, maybe your input can help your client make a lot of money. And at the risk of sounding crazy to my former bosses, what about the good feeling it gives to just help people? I love that feeling.
Another example of stupid advice from the alleged experts is, “Discounting fees conveys you’re not confident in your services”. After over 20 years, I’m plenty confident in the services my firm provides, and my fees are half of the standard 1.5% per year. I met with an affluent person a few months ago that told me they don’t mind paying higher fees for excellent service. It was like they wanted to pay high fees in order to ‘feel’ like they were getting the best performance. This is the same psychology Large Wall Street firms use when they lease expensive offices with lavish entry ways and furnishings. Clients of these firms should realize that, not only are they paying for the opulence, but high fees are NOT an indicator of better performance or safety, and neither is expensive office space. Ironically, it shows how financially inept these firms are. How many of them were involved in the 2008 Financial crisis, and had to be bailed out? Stupidity
The average Investment Firm client changes Financial Advisors 3-4 times, costing them thousands of dollars before finding a good one for their situation. Take the time to interview as many as it takes from the start. Money saved is better than ANY investment return!
Steve J. Casull, CEO & Founder