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Thayer Partners Blog

4 Things We All Hate About Financial Services

[fa icon="calendar"] Nov 11, 2015 8:00:00 AM / by Chris Wilmerding

Chris Wilmerding

Senior man frustrated with financial services rubbing his templesAs vital and as necessary as financial services such as financial planning and retirement income planning are, it often seems like the last thing that anybody wants to deal with is their finances.

Why is it that people seem to hate financial services so much? What causes frustration for not only people seeking financial advice, but for financial advisors themselves?

While listing every single thing that could possibly cause annoyance in dealing with financial services would be nearly impossible in a single blog post, here are a few of the more prevalent things that I’ve seen cause issues in the past:

Issue #1: That There are NO Absolute Guarantees

One of the biggest frustrations for clients seeking assistance with their finances is that there is no such thing as an absolute guarantee for any investment. A financial advisor can parse investments as carefully as possible, but there’s always that risk that any investment will fail to grow as expected, or that the principle invested will be lost.

The thing is, this is just as frustrating for financial service providers as it is for their clients. Any financial advisor worth his salt wants his client’s investments to succeed just as much as his clients do. The unpredictability of the market means that even so-called “slam-dunk” investments may not provide the best results.

So, when clients want a guarantee, the advisor really can’t give one that’s 100%.

Issue #2: Advisors That Give Every Client the Same Advice

As pointed out in a Forbes.com article, “As soon as you see the glimmer of a slick looking marketing sheet with impressive historical returns your antennae should go up.” The issue here is that the presence of a marketing sheet with impressive returns featured prominently on it means that the advisor is basically giving out the same advice to all of his or her clients.

Savvy clients know that what works for others may not work so well for them, and seeing an advisor give out some cookie-cutter advice can be frustrating. This is a financial service provider trying to sell a result that they may not be able to guarantee, and it really doesn’t take into account your own unique financial situation.

My personal advice for when you ask a financial advisor the old “can you help me” question and they just whip out a fancy set of charts, spreadsheets, and PowerPoint presentations with lots of complicated figures? Run the other direction.

Issue #3: Finding an Advisor with the Right Specialization

A financial advisor can be highly qualified, successful, and good at what they do, and still not be the right fit for every client. Within the world of finance, there are many different types of financial services. Unfortunately, one advisor might not be proficient in every discipline.

Think of it like going to the doctor’s office. Not only do you have a general practitioner that you see for common issues and checkups, but there are dozens of specialists that you have to deal with when you need any form of care, such as dietitians, anesthesiologists, transplant specialists, chiropractors, and even physical therapy specialists.

Sometimes, finding a financial service provider is like trying to get the right medical specialist to treat you. There are financial disciplines such as:

  • Retirement planning
  •  Debt elimination/management
  •  Tax planning
  •  Estate planning
  •  Business budgeting

The list goes on. Each of these disciplines has a different focus, and answers a different need. Many of these disciplines are governed by financial regulations and economic situations that change from year to year, requiring constant research if the financial advisor is going to stay up to date to provide useful advice.

Any single advisor that claims to be able to handle every financial discipline by themselves is either an unparalleled genius, or is being less than truthful.

Issue #4: Potential Conflicts of Interest

Here’s something that I mentioned in my post called “Top 4 Things Your Financial Advisor Doesn’t Want You to Know.”

For many financial service providers, particularly those who offer investment advice, there exists a potential for a conflict of interest if they make commissions. When a financial advisor works for a commission, it’s in his best interest to sell you on the products that will give him favorable results.

When clients are aware of this potential conflict of interest, it can create mistrust between the client and the investment advisor, which can lead to frustration on both sides or worse.

However, just because a financial service provider makes a commission doesn’t necessarily mean that he will only act in his own best interest. Many brokers that make commissions still try their best to serve the needs of their clients.

Dealing with the unpredictability of the market and finding the right financial advisor to help you can be frustrating, but this frustration shouldn’t keep you from trying to find the help that meets your particular financial needs.

 

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Chris Wilmerding

Written by Chris Wilmerding

Chris Wilmerding is Principal of Thayer Partners, an independent investment management firm located in Westwood, MA providing financial planning and wealth management counsel to individuals and their families.

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