Tiburon is a consultant to the financial services industry. In a recent conference they gave investors an opportunity to air their gripes about the experiences they have had. Here are a few of their gripes. Do they sound familiar?
- Advisors who lack expertise.
- Advisors who don’t explain what they’re doing.
- Advisors who never take the time to get to know the client.
- Advisors who lay out various investment options, but don’t tell the client which is the best.
- Advisors who sell a high-priced product, then come back years later and tell the same client to switch to another high-priced one.
- Advisers putting clients into products manufactured by their employers that don’t work out.
Some of these gripes can only be attributed to the advisor such as failing to tell the client the optimal investment option. However, a lot of these are due to the fact that many advisors work for the large investment firms who view their advisors as the “sales force” and put pressure on them to generate revenue by recommending in-house products or suggesting switches which do not benefit the client but generate commissions for the firm. For example …
Tomas, a technology specialist who considers himself a relatively savvy investor, described “as pretty awful” the experience he had with his wife’s advisors, whom he inherited when he married in 2008. Five years before, they had sold her family a variable annuity. Then the same advisors decided he and his wife needed to place that variable annuity with another.
“When I asked about the fee structure, they said we’ll have another group of experts coming to get into the nitty gritty,” Tomas said, setting off snickering among [the] financial executives.
Getting advisors who are brand new to the business is also associated with the major firms. These are the ones who hire people without financial experience, give them a self-study guide and some sales training and turn the people who call in asking for a financial advisor over to the rookie.
So .why don’t these people dump their advisors? Some do, but …
“It’s tough,” he said. “The relationship is ingrained over years.” This was confirmed by all investor panel members, who said it is often difficult to go through the process of re-allocating investments with another advisor.
If you have had an unsatisfactory experience with your financial advisor this may be the time to search for one that isn’t new to the business, doesn’t sell high priced or in-house products, cares enough to find out about you and tells you what he would do if it were his money. Contact us via our website or call 757-638-5490. While you’re at it, get a copy of our book “Before I Go.”