Due to the predominant advisor compensation structures, when a young person wants to enter the financial planning, investment, or insurance world, they are, in most cases, forced to become a financial products sales person. Most are trained right from the beginning to be asset gatherers, with the majority of their instruction training being focused on “sales ideas.” Industry awards and recognitions are almost exclusively focused on production and gross revenues while very few focus on practice management, business management, and quality financial planning. In many of the larger financial institutions, financial planning is looked at as a sales tool to push their proprietary products and goals. Most advisors are trained to do pseudo financial planning “off the side of their desk” as a freebie for purchasing a product. Some advisors will make financial projections (incorrectly calling the projections a financial plan), and provide the service for free as an enticement to earn a prospect’s investment and insurance business. The inadequate training programs provided by our financial institutions have precipitated the need for a medication to treat consequential symptoms, and the DOL Fiduciary Rule is the needed prescription.
Over the years, I have interviewed or met with advisors from a significant number of financial firms. Nearly every advisor has one thing in common: they all believe that the organization that they started their career with had the “best” training in the industry. Interestingly, most advisors also prefer their original organization’s business focus. For example: Advisors who originated from insurance organizations tend to promote insurance at a much higher rate than an advisor who originated from one of the big brokerage firms and vice versa.
The problem with training as it is currently being executed within the financial industry is that it is primarily created and delivered by conflict-of-interest ridden, product-pushing financial institutions. Our basic industry training teaches us that “doing right” by someone is pick an item out of a certain pre-approved box of options. By the definition of the DOL Fiduciary Rule, being a fiduciary means either throwing out the box altogether or being required, legally, to admit to the ideal prospect or client, as painful as it might be, that we don’t have a better option for them and therefore they should not buy our financial product.
In a post-DOL Fiduciary Rule world, to be a financial advisor will mean planning first and asset gathering second.