The Toughest Part About Being a Financial Advisor

andrew hallam

andrew hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (Wiley 2011) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I'm happy to comment on your questions. However, please read the Terms of Use.

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1 Response

  1. A CFP Observer says:

    Well said and 100% on target for the segment of the financial services industry that is compensated by commissions.

    I hold the CFP designation and have worked in financial services for over 10 years. I started out working for an insurance company, moved to an annuity company and then went to work for a bank. It’s worth noting that each of these companies had an "ethics" training program that was consistent with the high ideals of the CFP board and in sync with the oath to "put the client first" that is required each time one renews his certification.

    At the insurance company, the property and casualty side was pretty free from conflicts of interest, but the Life Insurance side was another story. I began looking for another job when the agency owner started pressuring me to meet with people who had high value, older whole life policies to try to encourage them to switch their cash values to Universal Life policies with higher death benefits. This put the client in a riskier product but generated a new commission schedule for the agency.

    The annuity company marketed primarily to colleges and K-12 school employees as one of the choices in their 403b plans. They also offered a wide range of financial products and services besides their highly profitable variable annuity. I left that company when I was told that my annual goals would include selling at least $3 million (net) new variable annuities. I couldn't understand how I could provide decent financial planning with that kind of pressure hanging over my head. It was approaching the planning process with the solution and then trying to make the facts and needs fit that solution.

    I had hoped joining the bank would free me from such shenanigans, but the bank wasn't much better. While they didn't have a signature proprietary product to push, they were shameless in pushing higher commissioned products. The difference between a senior advisor and a just plain advisor isn't any metric that a client would expect. It’s nothing like an exemplary track record, experience, training or education. It's based solely on the level of commissions generated for the bank. A senior advisor that generates a boatload of commissions is awarded with the title. One of my co-workers was a senior advisor and he used to brag that he never spent more than half an hour with a client. This was a guy who held a CFP designation and had taken an oath to put the client’s interest before his own or his companies! It's simply impossible to go through the planning process in half an hour, yet this person was held out as the model for all of us to emulate.

    I left the bank thinking I’d set up my own fee-only practice where I could do the right thing. That was in early 2008. Unfortunately the ensuing market meltdown pretty much made it too challenging for a start up.

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