Advisor/ Broker Reputations

or Register to post new content in the forum

72 RepliesJump to last post

 

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Apr 29, 2007 11:37 pm

My best friend is a lawyer at a prestigious law firm in town. So are several of my clients. I have other friends that are doctors. A few PhDs. We all went to the same top 50 US university.


How come we dont catch a break in terms of reputation versus these other professions?...these days to be an advisor the path is quite difficult with lots of exams and continuing education...like private practice lawyers and doctors we also have to do alot to grow our own practices...


I'm just interested to see what folks opinion is on why the words "i'm a financial advisor" puts a grimace on the face of 60% + of the people who you tell that to (as in "oh my god, what is he/she going to say next...he/she obviously wants my money")...


My take is that this lack of reputation is largely due to:


-Brokers exploits in the 80's and early to mid 90's


- The continued use of the word "commission" as opposed to fees...hedge funds and mutual funds don't refer to their take as "comissions" even though their "annual expenses" really are the same thing since its a consistent % of assets rather than a flat $$ amount or directly tied to any "paper expenses"...our pay, whether upfront or over time is still to cover our own personal "operating expenses"


- Some firms/ policies that do not allow advisors to freely choose the best products for their clients (i.e. "captive brokers")


- And related to that last point, cut-throat competition within the industry where we each label our neighbor as a scam artisit and mass publicize it in effort to win business away from each other (the biggest examples being vanguard/ fidelity "anti-broker" commercials, and motleyfool "anti-broker/ DIY" spams...you would rarely if ever hear one heart surgeon calling another heart surgeon a crook in the public space even if it was a valid point)...


And my last word...we advisors MUST band together and stop publicly deriding each other as this plays right into the hands of the divide and conquer technique of the Vanguard/ Fidelity/ DIY shops...if we would channel that same energy into publicly rebutting the massive amount of negative media on us (just do a google search for "how to choose a financial advisor" and see how overwhelming the message of DIY shops is in play) rather than bickering at each other on these message boards we might be able to ensure our survival into the next few decades (just ask any 20 to 30 year old today and they will likely tell you that they think the "professional financial advisor" is a dying breed relative to the free info online and the cookie-cutter recipes provided by DIY shops...heck...if i weren't in this industry i'd probably be using fidelity based on the popularity of the myths and half-truths they propogate...just imagine then where your last prospect is verifying info on "advisors" and on your last recommendation, and what that info is saying)...


Financial Advisors of the world unite!


- We passed tough exams and still have continued study...


- We are responsible for profit and loss of our practices


- We are arguably the most heavily regulated industry in existence


We deserve some respect


I'll take responses off the air...

Apr 30, 2007 2:06 am

I grimace when a guy tells me he's an attorney...


Seriously, I agree that we deserve some respect and I feel like I get my fair share.  It might be in the approach...if you are overly friendly and volunteer what you do without being asked, people may well see the sales pitch coming, particularly if they are often the target of such pitches.  A low-key approach...don't act overly interested in them, don't get more interested when they tell you they have a high-income occupation, don't volunteer what you do for a living, do use a less shop-worn title than financial advisor or wealth manager (I once caught my dog calling himself a financial advisor), such as investment advisor, certified financial planner, etc., do let clients introduce you.  My favorite is when one of my high profile clients introduced me by telling his friend, "this guy has made me a hell of a lot of money".  You can't buy advertising like that.  It wasn't long before I had a substantial piece of the friend's money on my books.


Life gets a lot easier and you get a lot more respect when you can put away the pitch and work from referrals.  Until then, my experience is that you'll get more respect with a low-key approach.

Apr 30, 2007 2:18 am

How come we dont catch a break in terms of reputation versus these other professions?...these days to be an advisor the path is quite difficult with lots of exams and continuing education...like private practice lawyers and doctors we also have to do alot to grow our own practices...


It is a great question, with a lot of implications, just don't look for a lot of deep thinking from the group here. You asked the big question and it is a good one. But the implications are too much for most to handle. I'll bet you have a pretty good handle on some starter answers to why our collective reputation sucks in relation to some other professionals, especially since we really do accomplish so much for our clients.

Apr 30, 2007 7:29 am

The good ones do get lots of respect.  The problem from a perception point of view is that any bozo can be a financial advisor.

Apr 30, 2007 7:56 am

It's the fault of the bank brokers that hover around the teller window and salivate whenever someone deposits a 4 digit check.

Apr 30, 2007 9:22 am
DCedjones:

We deserve some respect





See how people react when you tell them you are a Realtor(tm)



The core problem comes from the fact that Brokers are Registered
Representatives of the Firm, who are acting in the firms best interest.
Thus there is a missmatch in perception between the broker (salesman of
financial products) and client (trusted advisor).



I.e when a broker telsl a client to buy a closed end fund at IPO, Do
he  tell them that they are buying at 6% premium to NAV and that
90%+ of closed end funds trade below NAV within 12 months of IPO?



After getting worked over by the markup/down on bonds, closed end offerings, sales loads, annuities, etc most people have a vague unease about stockbrokers.



Vanguard/Fidelity know they have struck a nerve and will keep working the anti-broker message.



It's up to you to offer more value than a fidelity target date fund.

Apr 30, 2007 9:50 am
AllREIT:



I.e when a broker telsl a client to buy a closed end fund at IPO, Do he  tell them that they are buying at 6% premium to NAV and that 90%+ of closed end funds trade below NAV within 12 months of IPO?



Is this one of those "94% of all statistics are made up on the spot" facts?

Apr 30, 2007 10:13 am
mikebutler222:
AllREIT:



I.e when a broker telsl a client to buy a closed end fund at IPO, Do he  tell them that they are buying at 6% premium to NAV and that 90%+ of closed end funds trade below NAV within 12 months of IPO?



Is this one of those "94% of all statistics are made up on the spot" facts?



Actually Mike I think that's accurate.  I've read it elsewhere before.

Apr 30, 2007 10:38 am
AllREIT:
DCedjones:


We deserve some respect



See how people react when you tell them you are a Realtor(tm)

The core problem comes from the fact that Brokers are Registered Representatives of the Firm, who are acting in the firms best interest. Thus there is a missmatch in perception between the broker (salesman of financial products) and client (trusted advisor).

I.e when a broker telsl a client to buy a closed end fund at IPO, Do he  tell them that they are buying at 6% premium to NAV and that 90%+ of closed end funds trade below NAV within 12 months of IPO?

After getting worked over by the markup/down on bonds, closed end offerings, sales loads, annuities, etc most people have a vague unease about stockbrokers.

Vanguard/Fidelity know they have struck a nerve and will keep working the anti-broker message.

It's up to you to offer more value than a fidelity target date fund.


The better solution is to offer a guarantee of below market returns net of your fee?

Apr 30, 2007 10:40 am
joedabrkr:
mikebutler222:
AllREIT:



I.e when a broker telsl a client to buy a closed end fund at IPO, Do he  tell them that they are buying at 6% premium to NAV and that 90%+ of closed end funds trade below NAV within 12 months of IPO?


The 6% premium to NAV isn't shocking considering the markup on them. I'd like to see the 90% trading below NAV in 12 months supported. 


Is this one of those "94% of all statistics are made up on the spot" facts?



Actually Mike I think that's accurate.  I've read it elsewhere before.

Apr 30, 2007 10:40 am
Bobby Hull:

It's the fault of the bank brokers that hover around the teller window and salivate whenever someone deposits a 4 digit check.



LOL...the bank brokers?  Considering how the proliforation of "bank brokers" has only been a decade or so...I think you might have to work on that a little.

Apr 30, 2007 10:45 am

[See how people react when you tell them you are a Realtor(tm)

Agreed



Vanguard/Fidelity know they have struck a nerve and will keep working the anti-broker message.


I would agree but people have to understand they are brokers to.


I let clients know I work for them and that LPL works for me. And also if I  was at a wirehouse or Fidelity or Schwab I would work for that BD and not for them.      

Apr 30, 2007 10:47 am
Greenbacks:

[See how people react when you tell them you are a Realtor(tm)

Agreed



Vanguard/Fidelity know they have struck a nerve and will keep working the anti-broker message.


I would agree but people have to understand they are brokers to.


I let clients know I work for them and that LPL works for me. And also if I  was at a wirehouse or Fidelity or Schwab I would work for that BD and not for them.      



Precisely my experience.  People react in a distinctly different fashion when I tell them I own my own firm...it's funny really, because when I was in the wire world I was so attached to the idea of having a brand name.

Apr 30, 2007 10:53 am
BankFC:
AllREIT:
DCedjones:


We deserve some respect



See how people react when you tell them you are a Realtor(tm)

The core problem comes from the fact that Brokers are Registered Representatives of the Firm, who are acting in the firms best interest. Thus there is a missmatch in perception between the broker (salesman of financial products) and client (trusted advisor).

I.e when a broker telsl a client to buy a closed end fund at IPO, Do he  tell them that they are buying at 6% premium to NAV and that 90%+ of closed end funds trade below NAV within 12 months of IPO?

After getting worked over by the markup/down on bonds, closed end offerings, sales loads, annuities, etc most people have a vague unease about stockbrokers.

Vanguard/Fidelity know they have struck a nerve and will keep working the anti-broker message.

It's up to you to offer more value than a fidelity target date fund.


The better solution is to offer a guarantee of below market returns net of your fee?




Apr 30, 2007 11:03 am
joedabrkr:
mikebutler222:
AllREIT:



I.e when a broker telsl a client to buy a closed end fund at IPO, Do he  tell them that they are buying at 6% premium to NAV and that 90%+ of closed end funds trade below NAV within 12 months of IPO?



Is this one of those "94% of all statistics are made up on the spot" facts?




Actually Mike I think that's accurate.  I've read it elsewhere before.



I think the 6% premium to NAV is a slight exaggeration (at least in my experience I believe it is) and I'd like to see the "90% trading below NAV in 12 months from IPO" supported.



Notice, btw, it doesn't say "90% trading below the NAV AT IPO 12 months after the IPO.

Apr 30, 2007 11:06 am
Greenbacks:

I let clients know I work for them and that LPL works for me. And also if I  was at a wirehouse or Fidelity or Schwab I would work for that BD and not for them.      




Now there's an assertion that would interest tens of thousands of wirehouse brokers who, as a matter of ethical business practice place the client's interest first.

Apr 30, 2007 11:18 am
mikebutler222:
Greenbacks:

I let clients know I work for them and that LPL works for me. And also if I  was at a wirehouse or Fidelity or Schwab I would work for that BD and not for them.      




Now there's an assertion that would interest tens of thousands of wirehouse brokers who, as a matter of ethical business practice place the client's interest first.



His line gets apppointments with wirehouse clients. Another one that gets them is "the first thing I'm gonna do is turn off those perpetual fees." Or "I work with people who have outgrown what they're getting at the large firms."

Apr 30, 2007 11:19 am
Bobby Hull:
mikebutler222:
Greenbacks:

I let clients know I work for them and that LPL works for me. And also if I  was at a wirehouse or Fidelity or Schwab I would work for that BD and not for them.      




Now there's an assertion that would interest tens of thousands of wirehouse brokers who, as a matter of ethical business practice place the client's interest first.



His line gets apppointments with wirehouse clients. Another one that gets them is "the first thing I'm gonna do is turn off those perpetual fees." Or "I work with people who have outgrown what they're getting at the large firms."




So, dishonesty sells. Congrats....

Apr 30, 2007 11:26 am
mikebutler222:
Bobby Hull:
mikebutler222:
Greenbacks:

I let clients know I work for them and that LPL works for me. And also if I  was at a wirehouse or Fidelity or Schwab I would work for that BD and not for them.      




Now there's an assertion that would interest tens of thousands of wirehouse brokers who, as a matter of ethical business practice place the client's interest first.



His line gets apppointments with wirehouse clients. Another one that gets them is "the first thing I'm gonna do is turn off those perpetual fees." Or "I work with people who have outgrown what they're getting at the large firms."




So, dishonesty sells. Congrats....



Actually, I really DO turn off those perpetual fees. Wirehouse clients are the easiest to steal. "I'm a little confused, Mr. MS client, most of the MS clients that I meet are doing almost as well as I'm doing with my clients. In fact, I tell a lot of them to stay where they are. Why is your case different?" Gets 'em every time.

Apr 30, 2007 11:26 am

BTW, anyone else notice how the thread about RR reputations very quickly, and in a covert fashion, answered the basic question?<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />


 


It isn’t just outside threats to us, it’s how quickly some of us will impugn the integrity of others in the business in order to try to gain an advantage in the perpetual competition.


 


People selling annuities will quickly (and dishonestly) assert their products have fewer fees (thus the “broker meter” comment). Some <?:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Indies are happy to suggest that they hold their client’s interests first while other channels don’t. People who are enamored with passive investing will quickly question the integrity of the active management contingent.


 


Pogo was right….