Do you ever get mad at all the things that you think are wrong with your industry, company, workplace...whatever! I have been in the financial services industry for over 20 years of my life.
I love it, I really mean love it.
In my mind (other than playing in the NHL) there is no better job. I meet new people, make new friends, help them financially, and get paid to do it. How can you NOT love this profession? Like most things in life, it is not all roses, and on a day to day basis it is amazingly refreshing to wake up and love starting to work at 5am and never really stop until I got to bed at 11.
However one thing that has been eating at me for probably 15 of those years is the lack of transparency in 2 things in our business. Most clients are completely unaware of HOW THEIR ADVISOR MAKES MONEY (and more importantly why they should care). The biggest "secret" kept from clients is what we can and cannot recommend to our clients. How many Mercedes salespeople are going to tell you, after they learn everything they need to know about your driving needs, that the perfect car for you is a Toyota? Right, none.
Same thing happens in the financial world.
Here is a rough idea as to how it works. MFDA (Mutual Fund Dealers Association) licensed advisors can offer products like, savings accounts, GIC's, Mutual Funds and a few other less known products like Labour Sponsored Funds. Life Insurance companies have "investment" products very similar to mutual funds called segregated funds, and they can also sell GIA's (pretty much like a GIC).
Then you have IIROC (Investment Industry Regulators of Canada, used to be IDA or Investment Dealers Associationg) licensed advisors that can offer you all of the above plus individual securities like Stocks, Bonds, Limited Partnerships, ETF's etc.
In my career I started at our nations 2nd largest bank. I spent 8 years there starting as a teller and leaving as the Assistant Manager. I then started my Independent career (I will come back to what that means in a moment) at an MFDA licensed firm. And now will finish my last (hopefully 40+) years where I am at a full service IIROC firm.
When at the bank and my last firm, I can honestly say that I did a lot of very good financial plans and investment plans for my clients.
The transparency in offerings goes beyond what type of investment (mutual fund, seg fund, stock etc) and this could be an even bigger issue. Here is an example.
Back to cars, ok so you have decided on the Toyota and there is a dealership in town that has a car lot with 50 cars on it or there is another that has 5000. All else being equal, meaning service is great at both, they are equal distance to your home and everything else, where do you think your chances are better of finding the perfect fit for you? Same thing happens in this industry.
There are firms out there that have their own product. Chances are when you go and see an advisor from that firm, that is the product you are going to be offered. But are you told that there are 4950 more cars to choose from at the other location, or even worse that the EXACT same car is cheaper at the other location?
This is what I hate about my industry.
If I have one thing to offer you, I am going to fit it into your life somehow, and tell you how this one thing is perfect for you and how it is going to get you where you want to go. And if it IS the thing that you need, great but shouldn't you be told about other choices so that you can make an informed decision on what is best for your needs? Maybe a segregated fund is what you need, but if it is the only thing I can offer you, what are the chances I am going to tell you that what you really need is a mining stock.
Clients are left in the dark about a lot of things, but how and what your advisor gets paid and what they can and can not offer you should NEVER be hidden.
I would appreciate your comments or questions regarding these matters. Do you know HOW and WHAT your advisor gets paid and WHAT he/she can and can not offer you?
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