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Why You Can't Find a Good Financial Advisor
Are you wealthy? Are your friends wealthy? Do you know many wealthy people?
Chances are you are not wealthy, nor are many of the people you know. Nevertheless, I am certain you could benefit from good, unbiased financial advice. Unfortunately the current primary financial advice practice models are not designed to provide you financial advice. Most financial advice practices focus on high net worth individuals because these types of clients can be the most profitable.
This means you are left to choose from financial advisors who are peddling product, who are not required to work in your best interest and who may harm you financial well-being despite best of intentions.
This strikes me as deeply wrong. The financial advice industry will remain a marginal and unimportant profession until the industry can figure out how to provide access to good financial advice to the vast majority of the population (meaning non-wealthy individuals and families.) Financial advisors and financial planners can provide tremendously valuable and life-impacting services. These services can benefit non-wealthy people as much, if not more, than wealthy people.
There likely needs to be a fundamental shift in the way financial advice is delivered in order to be able to serve you. Currently the basic practice model requires large time and resource commitments of professionals to provide financial advice. This creates the desire to help high net worth individuals because the cost of helping others exceeds the revenue that can be generated.
There are some professionals trying to figure how to create a new model that can deliver advice to all. More practices are including hourly services that can be offered to people unable to pay the full financial planning fees generally charged. The Garrett Planning Network includes many professionals dedicated to offering services on an hourly basis to people of all income and net worth levels. MyFinancialAdvice.com is a newer offering which is trying to dramatically change the way advice is delivered to provide access to many more people.
These ideas and others need to be discussed by more financial advice professionals. The discourse needs to grow and more professionals need to become committed to finding a different way. This will be a central theme of my financial planning practice should I choose to begin one. It is something I believe in strongly.
Unfortunately, until more new models are developed and more professionals fill this need, you will be very limited in finding a good financial advisor.
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1 comments:
Nathan, well said. The Garrett folks, MyFinancialAdvice.com and many of my NAPFA colleagues do a great job of delivering hourly, as needed advice. Unfortunately too many middle income folks end up working with financial product peddlers whose main interest seemingly are often to earn the largest commission possible selling investment and insurance products to clients whether or not these products are the best solution. The flip side is that financial advisors have to make a living as well, so you are correct that our profession needs to develop service delivery models that work for all stakeholders.
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