Trust is key for planners
More trustworthy than plumbers and lawyers
The business of financial planning is as much, if not more, about trust than about money. Ask any financial advisor for the key to her relationships with clients, and she'll tell you it's 'trust' - as with any relationship. A recent survey suggests that individuals don't hold their advisors in very high regard, overall.
Ipsos-Reid, in conjunction with Reader's Digest polled more than a thousand Canadian adults about the individuals and industries they trust most. It will come as no surprise that the medical profession was found atop both lists. Interestingly, the people to whom many Canadians entrust the fate of their life savings landed only around the middle of the pack.
Out of 26 professions, financial advisors ranked twelfth - sandwiched between chiropractors and plumbers. Of 29 industries, financial planning came in at #14, with investment advisory at #18. (Interestingly, lawyers ranked eighteenth; with national politicians and tobacco ranking last in both lists.)
So, what does this say about the state of the very industry from which I derive my living? I'd say it's suffering from something of an image problem.
The press release summarizing the results along with a few charts can be found here.
The survey supports my observation over the past couple of years, which is that many people are unhappy with their financial advisors. But the flipside is that most people need advisors. So why are so many people having difficulty finding somebody they can trust?
Expectations and regulations play big roles in all of this.
I can't tell you how much e-mail I get from people desperate to dump their current advisor and hoping that I can come up with their financial knight in shining armour.
But the fact remains that people enter relationships with advisors expecting them to work small miracles. When they don't - i.e. when they fall short of expectations - they disappoint their clients.
The other side of that coin is that many advisors talk a good game and are partly to blame for the unrealistic expectations held out by some of their clients.
With what is known in our industry as the big "sales season" well underway, you'll no doubt be inundated with solicitations of some sort over the next five weeks trying to lure you to contribute to your RRSP.
Those advisors pushing today's hottest investments are likely those that should rank equally with national politicians. And as we saw in last week's column, you owe it to yourself and your net worth to resist that urge - as tempting as it may be.
In any event, if you're even thinking of switching advisors, this is not the time to do it. The holidays have just ended; you're now thinking about what to contribute to your RRSP; and then comes the season to file tax returns.
The point: don't make such a critical choice in the midst of so much going on. Make the decision to change advisors, fine, but don't actually do it until you've had the time to think about what you want and need - and to go out and interview some good candidates.
I won't rehash old material, except to point out that it exists. About a year ago, I wrote two articles in this space on advice and finding your ideal advisor. Find my weekly archive here and revisit my third and fourth articles of 2002 to get you in the mindset of what you need to do when that time comes.
My next two articles will focus on providing ideas for your RRSP contributions.
Dan Hallett, CFA, CFP is the President of Dan Hallett & Associates Inc. in Windsor Ontario. DH&A is registered as Investment Counsel in Ontario and provides independent investment research to financial advisors. He can be reached at firstname.lastname@example.org
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