It’s my friggin’ Birfday. Howzabout that?
Happy birthday to me.
And what do I get for my birfday (other than awesome presents from the wifey)?
Here’s what I mean:
After working with financial planners for over 13 years, I’ve learned just how futile their attempts are at getting people to save money.
Some of this boils down to the individual.
If you’re simply unwilling to save money — and I fully realize there is a segment of the population so resistant to saving money that they will invent literally any excuse to avoid it — then no one can help you because you’re unwilling to help yourself.
In a sense, these people have made themselves helpless victims and you can’t help a helpless victim because they’re helpless.
BUT… beyond that… a financial advisor has a great deal of influence over how much his or her client is able to save each and every month.
The problem is… the great majority of life insurance salesmen are just that — salesmen. Their primary job is to sell you insurance.
Their job is not to help you design any sort of financial plan.
In the investment industry, there is an equivalent: the registered representative. His job is to sell you mutual funds. That’s it. In fact, when I was a registered rep, there was an explicit (in my contract) enforced quota I had to meet every year or else I would earn myself a nice fat fine from my brokerage firm, which was enforced by the National Association of Securities Dealers (today, it’s called FINRA).
Investment advisors and certified financial planners are a step up from the usual sales-driven culture in the financial industry but again… the job is primarily a sales-driven job that requires the advisor to collect “assets under management” (they call it “AUM”).
But when it comes to a smart income plan after you’re done saving all that moolah? They have no clue what to do.
Now, don’t get me wrong. There’s absolutely nothing inherently evil about sales. In a sense, every business and every professional is in the business of selling either their product or service or… selling themselves.
There is, however, something wrong with a culture that prioritizes sales for the sake of selling over selling a solution to a bonafide financial problem.
And that, my friend, is a major problemo in the financial services industry. A problem almost no one talks about but which I suspect most customers and clients can “feel.”
Here’s what I mean:
When I worked for MetLife, we had a guy in the office who had no problem telling his clients to borrow money against their whole life insurance policy so that he could sell them either more insurance or some investment of some kind.
He never told the client that they had to repay the policy loan or it would lapse. And in fact, he was counting on the idea that the client WOULD NOT repay their policy loan so that they would “need” his help in the future.
But not all cases are as insidious as this. Probably most of them are way less severe and way less… well… way more compliance-friendly. Let’s just say that.
I (briefly) worked with a Certified Financial Planner once where she made a recommendation to a client to buy mutual funds so the client could pay life insurance premiums.
The client didn’t really need mutual funds (and it’s arguable that she didn’t need life insurance either) but… this was a commissionable sale and the CFP and her husband had a VERY nice house on the lake with a big mortgage (which they showed me on their computer screen — they had some kind of camera pointed out at the dock, with a live feed hooked up to the computer in the office).
A much less obvious case involved a registered investment advisor I knew through some acquaintances. One time, at lunch, we were all sitting around yammering about the market (yes, we do that) and he starts telling this story about a prospect he went to see… and how this person didn’t have a budget and was struggling to figure out how to save money for their future.
He said he basically just got up and walked out of the house and told them to give him a call when they had a budget. Said that it’s not his job to make a budget for them… and that people should come to him with a budget and lots of money for him to manage.
This is pretty typical in the industry.
Advisors tend to sell products just to sell products and give lip service to the idea that they are solving any kind of financial problem.
And thing 2 is… most advisors accept the fact that their clients won’t ever save more than 5%-10% of their income because they don’t know how to help their clients save 30%-40% of their income.
Heck, most financial advisors aren’t saving that much themselves.
So, if they DID know how to do that, they would help their clients.
But they don’t help their clients, and they don’t think it can be done and so their focus is on relatively high risk investments to make up for a low savings rate which then gets passed off as a “conservative investment”… or… working with high net worth individuals who “have money” that they can manage for them.
Now… I know everyone knows a guy who knows a guy that’s not like that.
But… there are a lot more of these unhelpful guys out there than there are of the other type.
Now… if you can find one of the “good guys”… then you should marry them and treat them to dinner at least once a month or something.
But, if you can’t find one, then you should clutch your wallet with every last bit of muscle fiber in your body and focus on creating a budget and working yourself up to a 25% to 30% savings rate on your own.
Put that money into a decent savings or money market account until you can find someone worth their salt.
And if you want my opinion on what you should do with that moolah, go join my email list, where I share my best financial resources, plus a bunch of stuff not available on the blog.