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I Think … Not in My Universe
By Dr. David Edward Marcinko MBA CMP™
[Editor-in-Chief]
www.CertifiedMedicalPlanner.org
Survey after survey has shown that the public does not trust the financial services industry; it was – in fact, the least trusted industry in a recent Rick Edelman survey.
John Hancock?
But, perhaps they were looking at the wrong industries, or maybe investors just don’t trust your firm. A new survey by John Hancock shows that investors with assets of $200,000 or more, trust their financial advisor [FA] more than their primary doctor, accountant, contractor/handyman, boss and real estate agent. It was penned by one young staff writer named Diana Britton.
My View Point is Pretty Unique
Now, I am a doctor and board certified surgeon who held Series #7, #63 and #65 securities licenses, and was a Certified Financial Planner® for more than a decade. I was registered with a BD, SEC and NASD/FINRA, and held life, health and PC insurance licenses. This is the so-called “dual registration” to earn commissions and fees.
And, I’ve got a current partner who is a doctor-CPA who has a Master’s Degree in Accounting. So, I know from whence I speak.
An Insurance Company!
Now, I resigned all of the above financial services monikers because of their lack of education and fiduciary accountability. These are sales licenses, certifications to hold a certification, and related gimmicks, all. Insurance agents have a duty to the company, not the client. Always ask them to put your best interests ahead of their own – in writing before hire – and watch them run.
Assessment
I suspect this study from an insurance company is less than accurate. How do I know? My gut heuristics tell me. Agency law tells me. No surveys needed or damn statistics for me. How about you? OR, are the marketing and PR gurus winning the public opinion battle with their insurance company advertising chicanery? ie., Hancock’s the future is yours!
If really so, here is my razzy for them.
Conclusion
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Filed under: "Advisors Only", Career Development, CMP Program, Ethics, Insurance Matters, Op-Editorials, Risk Management | Tagged: certified medical planner, CMP Program, David Edward Marcinko, Diana Britton., Do Clients Trust Financial Advisors More than Doctors or CPAs?, FINRA, John Hancock, Rick Edelman, SEC, www.CertifiedMedicalPlanner.org |
The Leading Business Education Network for Doctors, Financial Advisors and Health Industry Consultants 
Dr. Marcinko
Good post. Here is another. Can you trust a financial adviser?
http://money.msn.com/family-money/can-you-trust-a-financial-adviser-weston.aspx
Remember, not all financial advisers are created equal.
Dr. Armardare
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I DO Care
http://thehealthcareblog.com/blog/2012/06/15/your-doctor-cares-no-really/
No really!
Dr. David Edward Marcinko MBA
[Publisher-in-Chief]
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JPMorgan still pushing proprietary mutual funds
One of the perennial issues in the wealth management industry is the extent to which brokers and financial advisors push proprietary products, which typically generate big fees for them personally as well as their firm even when there are cheaper, higher quality products also available.
http://www.fiercefinance.com/story/jpmorgan-still-pushing-proprietary-mutual-funds/2012-07-03?utm_medium=nl&utm_source=internal
So, should we trust em’ when they are from JPMorgan?
Darrin
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Advisors
This unsolicited email was sent to us and is now posted, thusly.
Ann Miller RN MHA
*********
Why You Should Not Trust Financial Advisors
By Lon Jefferies
This month I received a fax from one of my clients requesting that I liquidate his IRA so that the funds could be invested in a guaranteed annuity product. In the letter, the client stated he was aware that market-driven investments have greater potential for growth but the annuity would provide him a guaranteed return. He also stated that he didn’t want further discussion on the matter, that he understood the pros and cons of the annuity, and that he did not wish to be contacted further. Upon receipt of his instructions, I immediately liquidated his investments and sent him a brief email stating that his funds were ready to be transferred.
I was surprised when the client called me shortly after I sent the email. The client instructed that he did not wish to have his assets immediately liquidated. This was opposite the instructions I had received via fax. It also quickly became clear that the client was interested in my opinion of the annuity he was considering and was anxious to examine any analysis on the product I could provide. At this point, it became evident that the financial advisor who was selling the annuity to the client had written the letter I had received, and that the communication didn’t represent the wishes of the client. My belief is that the advisor had painted an unrealistically positive analysis of the product he was recommending and was attempting to ensure the client didn’t have the opportunity to get an unbiased opinion of the annuity. STRIKE ONE for the advisor.
After my conversation with the client, I typed the name of the financial advisor promoting the annuity into Google. The first item that came up was a complaint filed against the advisor by the Utah Insurance Department. The plaintiff was found to have a recording of the advisor making statements such as “there is no risk” associated with an investment, which the State found to be illegal and deceptive. The advisor was also found guilty of having clients sign various incomplete documents associated with annuity applications, with blank spaces yet to be completed. As a result, the advisor was fined, placed on probation for 12 months, and required to take additional courses on ethics. STRIKE TWO for the advisor. (I know baseball requires three strikes, but this strike alone should be enough for investors to look elsewhere for financial advice.)
Ultimately, the client determined it would be in his best interest to have a three-way conversation between himself, the advisor promoting the annuity, and me. I agreed that such a meeting would be beneficial and invited the discussion to take place in my office. However, I stated that I would need a copy of the annuity contract he was considering beforehand in order to complete my due diligence. I needed the contract in advance because annuities are so complicated (purposefully so) that it takes even a well-trained, fee-only Certified Financial Planner several hours to read and understand the pertinent information and determine if it may be a good fit for a client. The client agreed and immediately asked the advisor to fax or email me the relevant information.
One week later, and the morning of the appointment, I informed the client that I had never received the information (despite multiple requests), and that it wouldn’t be beneficial to conduct the meeting until I had a chance to review the material. The client agreed and the meeting was cancelled. However, the annuity salesman showed up at my office at the time of the scheduled appointment informing me that the client was still planning on attending. I asked why I had not been provided with a copy of the relevant material in advance; the advisor replied he was out of the office during the last week. Essentially, the advisor was contending that he never had the opportunity to fax or email me a simple Microsoft Word document. Yet, the advisor had conducted multiple conversations with the client during the week. In today’s era of computers, fax machines, and smart phones, I find it hard to believe that the advisor (or any of his work associates) never had the opportunity to send me a simple email during a week when he was in clear communication with the client. My strong belief is that the advisor simply didn’t want to allow anyone the opportunity to determine that he had not adequately represented both the pros and cons of the product. STRIKE THREE for the advisor; he’s out! However, the saga continues.
As the advisor had arrived at my office before the client, I suggested I take the contract and read as much as possible before the client arrived so that we could have a productive conversation. However, the advisor would not allow me time to read the contract or even permit me to hold the document despite my multiple requests to do so. STRIKE FOUR.
In an attempt to educate myself as best I could before the arrival of the client, I agreed to let the advisor “walk me through” the material he had brought. As a result, the advisor placed the document on my table, pointed out the guaranteed rate of return and quickly flipped the page. He then pointed out the bonus return that was applied to new contracts and again quickly flipped the page. Finally, he pointed out the annuity contract’s income schedule and quickly turned the page. Clearly, the benefits of the annuity were being pointed out while the details – or fine print – were being avoided. STRIKE FIVE.
At this point, I communicated to the advisor that this exercise was not helping me develop my understanding of the annuity, and that I needed to read the contract. To this, the advisor stated “I’m the annuity expert in the room; you should allow me to explain the product to you.” At this point it became clear that the advisor was not going to allow me an opportunity to review the product, and as a result, any conversation involving the two of us and the client would not be an educated discussion about financial planning and what was best for the client. I refused to continue the conversation and asked the advisor to leave my office, stating that the client was interested in my opinion of the annuity and that he should leave the contract with me so I could inform the client of my opinion and of questions that should be asked. Again, the advisor refused to let me look at the contract and would not leave it with me. STRIKE SIX.
The client ultimately required the advisor to return to my office and leave a copy of the material he had brought to the meeting. After several hours of reviewing the contract, I discovered the annuity included several major drawbacks that had not been clearly communicated to the client; as a result, I found it was not a particularly attractive investment. For a comparison of how the advisor had presented the annuity with how the annuity actually functioned, click here.
How can one be confident they can trust their financial advisor and avoid individuals like this? Unfortunately, the term “financial advisor” has become vastly overused and is frequently quite misleading. When is the last time someone introduced themselves to you as an insurance salesman, annuity salesman, or stock broker? Those terms don’t exist anymore because all those professions now refer to themselves as “financial advisors.” These individuals can be wolves in sheep’s clothing. If you meet with an annuity salesman who calls himself a “financial advisor,” he is going to recommend an annuity 100% of the time, regardless of what is in your best interest.
The key is to find a fee-only Certified Financial Planner® who acts as a fiduciary. Fee-only means the advisor is only paid by the client, and never collects commissions from selling products. This will ensure the advisor is recommending a product that is a great fit for you rather than simply selling a product in order to collect a large commission. A Certified Financial Planner® (CFP) is an individual who has completed the gold standard of education in the financial planning industry and is well educated in every aspect of financial planning, ranging from investments, to retirement planning, to taxes, to insurance, to estate planning. Finally, a fiduciary is someone who is legally obligated to act in the client’s best interests, similar to a doctor, attorney, or accountant. Surprisingly, most “financial advisors” are not fiduciaries. In fact, over one million people in the US refer to themselves as “financial advisors,” but less than 1% are fee-only CFPs acting as a fiduciary.¹
When looking for a trustworthy financial advisor, do your homework. The National Association of Personal Financial Advisors (NAPFA), located at http://www.napfa.org, is a great place to start. NAPFA is the nationwide association for fee-only financial planners. Further, insert your advisor’s name into Google to ensure no complaints have been filed against the person. It’s worth the effort – being sold a product that is not in your best interest will cramp your retirement efforts for decades.
The advisors at Net Worth Advisory Group are fee-only CFPs® acting as fiduciaries, and always happy to provide a second, unbiased opinion of any investment you may be considering.
¹As measured by the percentage of financial planners who are NAPFA members.
Lon Jefferies CFP MBA
Net Worth Advisory Group
9980 S. 300 W. #110
Sandy, UT 84070
801.566.0740
lon@networthadvice.com
http://www.networthadvice.com
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Financial Services Workers Report Awareness Of Wrongdoing
Lon – Almost one quarter of the nation’s financial-services workers are aware of illegal behavior at their companies, and many fear reporting it, a survey by the securities litigation law firm Labaton Sucharow LLP found.
http://www.fa-mag.com/fa-news/11567-financial-services-workers-report-awareness-of-wrongdoing.html
Now, what if your doctor acted like this?
Thus, the reason – and need – for the Certified Medical Planner® professional designation is re-confirmed yet again!
Dr. David Edward Marcinko MBA CMP®
[Founder and CEO]
http://www.CertifiedMedicalPlanner.org
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About the Peregrine Financial Group
Lon and Dr. Marcinko, etc – Did you know that nine months after the collapse of MF Global, another futures trading firm has imploded?
http://easterniowanewsnow.com/2012/07/13/ceo-of-peregrine-charged-in-200-million-fraud-scheme-appears-in-federal-court/
Peregrine Financial Group (PFG), also known as PFGBest, filed for Chapter 7 in federal bankruptcy court on Tuesday. The filing occurred a day after the firm’s founder, Russell Wasendorf Sr., attempted suicide. Wasendorf is accused of misappropriating customer funds, making false statements and fraud.
Hampton
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The financial services industry shenanigans just keep rolling-in?
HSBC Bank
A “pervasively polluted” culture at HSBC allowed the bank to act as financier to clients moving shadowy funds from the world’s most dangerous and secretive corners, including Mexico, Iran, Saudi Arabia and Syria, according to a scathing U.S. Senate report issued on Monday.
http://bottomline.msnbc.msn.com/_news/2012/07/17/12783850-report-hsbc-allowed-money-laundering-that-likely-funded-terror-drugs?lite
Barclay’s Bank
While the LIBOR rate-rigging scandal has exploded just recently, in some ways it is old news.
http://www.fiercecomplianceit.com/story/barclays-settlement-strategy-backfires/2012-07-11?utm_medium=nl&utm_source=internal
On JPMorgan
http://money.msn.com/investing/disgusted-with-jpmorgan-jubak.aspx
Litia
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And now … the good banks?
The 359 safest banks in AmericaThe following institutions, grouped by state, boast perfect scores using a method developed to diagnose failing banks.
http://money.msn.com/personal-finance/the-359-safest-banks-in-america-investinganswers.aspx
Abbey
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Financial Advisors Really Do Offer Value?
I just read a new LIMRA survey finding that three in five people who work with a FA contribute to a retirement plan while only 38% of people doing their own financial planning invest in similar long-term investment plans.
http://www.financial-planning.com/news/limra-survey-importance-effectiveness-financial-advisors-clients-2679840-1.html?ET=financialplanning:e8955:2248552a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=FP_Daily__071712
NOTE: LIMRA is a consulting and professional development organization dedicated to helping more than 850 insurance and financial services companies in 73 countries increase their marketing and distribution efforts.
So, is this “survey” credible or merely promotional – you decide http://www.LIMRA.com?
Maybe it’s just all that FA sales pressure?
Marshall
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Hancock Looks to Boost Advisors’ Value
John Hancock Funds just unveiled a new program and a survey to help retirement plan advisers demonstrate their value and build stronger relationships with their plan sponsor clients.
http://www.financial-planning.com/news/hancock-looks-to-boost-advisor-value-2680031-1.html?ET=financialplanning:e9050:2248552a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=FP_Daily__072412
The program includes a Guidebook, Wholesaler PowerPoint, and Plan Sponsor Toolkit.
So, I think I’ll stick with my opinion, voiced above.
Dr. David Edward Marcinko MBA
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SEC vs. FINRA
[Which Regulator Is Tougher?]
Which group of advisors is truly subject to stricter oversight?
http://www.financial-planning.com/fp_issues/2014_2/sec-vs-finra-which-regulator-is-tougher-2688037-1.html?utm_medium=email&utm_campaign=-feb%205%202014&utm_source=newsletter
FINRA may not be telling the whole story; according to this article.
Emiel
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