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Forget the Fiduciary Fight
It appears the U.S. Congress is set to fail the American public and allow major financial services companies to continue to provide the public bad financial advice. The Senate continues to fight against a fiduciary standard apparently unwilling to make difficult political decisions which could cost them major campaign contributions.
But why are those of us who would consider ourselves financial planners fighting to have other professionals act as fiduciaries? Why are we lumping ourselves together with the entire financial services industry when we should be working to separate ourselves? I say, let them have their conflicts of interest and their lack of focus on clients and their confusion. Let's take this opportunity to create true separation from the product distribution industry.
People are desperate for good, honest financial advice. Let's grab the mantel as financial planners. Let's band together and work with one another to create a profession dedicated to serving people. Let's move to a different sandbox and leave the financial services people alone.
Let's find a place where we can sit around a table and decide what financial planning is and what it means to be a financial planner. We can welcome everyone who wants to put their clients interest first as the base qualification for admittance, then begin hashing out a definition. We can invite the Certified Financial Planner Board of Standards, Inc., the Financial Planning Association, and the National Association of Personal Financial Advisors to join and be integral to this movement. Let's finally make this break and plant our flagpole. Let's lay claim to being the true profession to help people with their financial well-being. If you don't like what we decide, you will certainly have every right to leave and return to the financial services industry.
I like to occasionally ask myself my assumptions might be wrong. I asked myself this question about the fiduciary issue, and came to the conclusion I have outlined above. Now I ask you to take a moment and consider whether your assumptions might be wrong also.
Maybe It's Time For a Free Financial Plan
The following post has also been posted on my other blog, Blogged Business Planning, and the discussion about this idea has been in full swing. I encourage you to visit this post on that blog to get the full comment thread.
You've already read about my beliefs on free financial plans in an earlier blog post. Now I am going to make an argument against that post.
You've already read about my beliefs on free financial plans in an earlier blog post. Now I am going to make an argument against that post.
Yesterday, financial planner Rick Kahler, CFP® posted a great piece titled "Study A "Test Drive" For Financial Planning" on his blog which does a wonderful job quantifying the benefits of financial planning. I applaud him for this "test drive" concept, but I think it's time to challenge the financial planning profession to take that a step further and offer a true test drive.
I believe it is time for those of us who provide true financial planning - meaning planning focusing on a client's overall financial well-being, not just investments - to offer a true test drive. It's time we teach the public the true value of financial planning so they can learn for themselves why it has so much power and why investment management is not the true value financial professionals deliver.
What I propose is to take prospective clients through the financial planning process for free! Agree on a fee in advance, but allow these prospects to decide if they believe there is value in the financial planning process after they have had the opportunity to see for themselves. If you are delivering a valuable financial planning service focused on a strong promise and deep relationship with clients, I suspect many prospects will understand the value and agree to continue the relationship in a for-fee arrangement.
We can begin teaching more people about the benefits and power of financial planning if we show more people why it is so powerful. Removing cost commitment up front will allow us to reach more people. Sure you'll be taken advantage of by some people, but even in these people you may build goodwill and good word-of-mouth if the situation is handled respectfully.
So let's really start showing the public the value of financial planning. Give them a taste of financial planning for free. Consider it a contribution to the profession and as a marketing cost, if that makes the loss experience more palatable. This is what I plan to do as soon as I begin engaging with clients again.
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