Prove them wrong. Wipe the smirk off their face. Remove the pretentiousness from their voice. Throw their words back in their face, not with your words, but with action. Prove them wrong.
The Great Debate
I frequently debate financial strategies with Financial Service Representativeslike those at my old firm. These debates include me showing how bad insurance products are and sharing the superior strategies that lead to superior results. They toss out some insurance myths, and I systematically debunk them. It’s a pretty one-sided affair.
Left with no other option, they will inevitably resort to this tired statement, “We need to sell them the insurance because they won’t do those other strategies on their own.”
“We must sell them life insurance from our expensive company because they wouldn’t get it otherwise.”
“We must sell them whole life insurance to accumulate cash value because they won’t save on their own.”
“Universal life is a great product because even though investing is better, they won’t buy-term-and-invest-the-difference.”
“So what if annuities are extremely expensive and have a poor return? Who cares if, on paper, your retirement investment strategy is better? Without the guarantees of an annuity, they won’t be able to stay invested.”
“Without us and our horrible-for-the-client great-for-our-wallet products, you will fail!”
Let me address these Financial “Advisors” and then challenge you, the listener.
Response to Reps: Your Responsibility
Here’s my response to Financial Representatives: With great power comes great responsibility.
Advisor or Salesperson
You are holding yourself out as an “Advisor” and an expert in personal finance. You have power and influence over the decisions clients make. And with that power comes a responsibility to do what is best for the client.
If you think your primary duty is to earn commissions so that you can provide for your family or qualify for a bonus trip to Hawaii, then title yourself what you are: “Financial Products Sales Representative.” Then folks will know that your job is to sell them products, and buyers beware.
But if you call yourself an advisor, your duty shifts to doing what’s best for the client. Your responsibility is to guide them to the best chance of success. And if you can’t do that well enough to provide for your family, that’s not the client’s fault. It’s not their job to ensure you’re profitable; your success cannot come at their expense.
They Can’t Do It Without Us
You say clients won’t achieve their goals without you and your products. Let’s handle that first part.
It may be true that clients won’t be successful without your guidance. Perhaps they know that, and that’s why they are coming to you. They want someone they can trust to guide them to success.
But they are coming to you! They are not coming to your company. They are coming to you.
No one says to themselves, “I’m not sure I can navigate this complex financial world alone, at least not optimally. I better find an insurance company to sell me products and investments to help me meet my goals.”
No! They say, “I’m not sure I can navigate this complex financial world alone, at least not optimally. I better find someone to help me.”
They trust you to guide them to the best possible solution.
Perhaps they need term life insurance and haven’t bought it yet. Great! Recommend the best value in term life insurance they can get!
Perhaps they won’t buy term and invest the difference on their own. No problem! That’s why you’re there. If you can convince them to put $500/m into whole life insurance until age 65, surely you can convince them to put $50/m into term life insurance and invest the other $450/m into a Roth IRA until age 65. The whole life product must be sold, but a Roth IRA strategy sells itself!
Perhaps they would panic out of the stock market in retirement on their own. But isn’t that why you’re there? To talk them off the ledge? To help them understand what’s happening? To have constructed a plan that can weather a global financial crisis? That’s what they are trusting you for!
You may be right. They can’t do it without you. That’s why they are coming to you.
They Can’t Do It Without Our Products
Yes, they can. With a proper strategy and plan, and ongoing accountability and guidance if they need it, they can do it without your products. In fact, they’d be much better off.
Often, your products make it worse. I’ve seen it time and time again. A sales rep comes in and makes a situation worse with their product.
Scenario: A household has young kids, and the parents have $500,000 in term life insurance but actively contribute to Roth IRAs. Then the sales rep comes in and says they’re underinsured. He recommends $1 million in coverage. Good so far. Then he recommends they “diversify” their savings, reducing their Roth IRA contributions to “invest” in a whole life insurance product. They go from underinsured and properly saving to overinsured and undersaving. They are worse off after you “helped” them.
Here’s where a sales rep objects, “But I’ve seen it! This client needed some cash because they were in a bind. Thankfully, they were able to leverage their cash value with no tax penalty and got the money they needed. The product did help them achieve their goal.”
And that seems great until you go back and look at how much would have been available to them if they had invested that money instead of buying whole life insurance. And it looks even worse when you look forward at how much it’s going to cost them in interest to “use their own money” from the policy.
Give me any scenario, and I promise you I can show you how it would have been or will be better with good strategy instead of products. They don’t need your products.
Listen, financial representatives; I get it. It’s hard to become a fiduciary financial planner. You have to learn a lot. You need to develop lots of skills. It’s far easier to learn to sell products for an established company than to learn how to communicate strategies and become a true financial guide in a changing landscape.
Be better. The difficulty of becoming a real finical advisor is not an excuse to call yourself one and then sell products instead. Either level up your skills to become what you say you are, or stop saying that’s what you are. Be better.
Response to Clients: Prove Them Wrong
To all the non-financial folks out there, I say this: prove them wrong.
“They would never do what they need to do without us.” Prove them wrong. Take initiative.
Take initiative on insurance. Figure out if you need insurance, which types, and how much. Do this without the help of someone who sells insurance. Do your research, or work with a fiduciary who will recommend what you need and receives no incentives to recommend more or less, or specific types. Knowing what insurance you need and how much gives you the power to do what’s best for you.
Take initiative on investing. Don’t wait for a financial salesperson to push you to invest more, along with selling you a product. Do it.
Take initiative with financial planning. Financial sales representatives prey on those without direction and plan for their finances. Anything is better than nothing, so it allows them to justify selling horrible products to you because they are slightly better than doing nothing at all.
“They would never stay the course of a financial strategy. They need longer surrender charges to keep them invested and required premiums to keep them investing. When things get tight, people stop saving and investing but don’t stop paying their bills. That’s why they need these products.”
I’ve heard some version of that so many times. Prove them wrong.
Don’t just start investing. Keep investing.
Don’t just get invested. Stay invested.
Build the discipline to keep doing the things you need to do for decades. Get help and accountability maintaining those disciplines. It’s much cheaper to get help sticking to a great plan for the long haul than it is to fail the plan and or buy alternative products.
Prove them Wrong By Doing It Right
No one wants to be mediocre with money. So what do they do?
They ask for adequate advice. The request rudimentary recommendations. They seek out subpar strategies. Right?
No! They want the finest advice. They want best-interest recommendations. They desire optimal strategies.
Don’t fall for their sales presentations and products. Get and follow the best strategies. Starve them of clients. Prove them wrong.
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This article is educational only and is not intended to be investment, legal, or tax advice or recommendations, whether direct or incidental. Again, this is not investment advice. Consult your financial, tax, and legal professionals for specific advice related to your specific situation. Never take investment advice from someone who doesn’t know you and your specific situation. All opinions expressed in this article are those of the people expressing them. Any performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be directly invested in.