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Self-serving scandal
If you follow the news it’s pretty hard not to get wound up about something or other on a daily basis. Why?
Because some people and some organisations just seem to have forgotten who they serve. In fact, serving others is not even part of their agenda. Serving themselves seems to be priority number one, and it makes me mad.
Here are a few choice examples:
The recent Asset Management Market Study Interim Report by the UK Financial Conduct Authority (FCA) saw the funds management industry exposed for high costs and poor performance. It’s not before time.
Wells Fargo, a US bank and one of the world’s largest, saw employees opened more than 1.5 million fake bank accounts as they tried hit sales targets. When the scandal became public they sacked 5300 staff, but initially not one senior executive or manager. It was only after pressure from Senator Elizabeth Warren that some higher level sackings took place. If you’re after some cutting and insightful observations about that behaviour, watch this clip. Elizabeth Warren nails the real issues here. They apply to many other large corporates as well.
After information about the Wells Fargo scandal broke, Prudential Financial, another US company, decided to review sales practices of their life insurance policies, as they had a distribution partnership with the bank. However, when employees at Prudential discovered that some less-than-desirable sales practices had been used at Wells Fargo, according to this piece in the NY Times, they were fired.
I haven’t mentioned any issues specific to advisers or advisory groups operating here in the UK, but I’m sure readers of this piece know their own stories of poor practice and questionable ethics.
How to save the world
You don’t have to be Einstein to know that the financial services industry is a little bit broken.
I love the line from the film Schindler’s List, which I believe is taken from the Talmud, the book of Jewish law, “Whoever saves one life, it is as if he [or she] has saved the whole world.” In fact, this sentiment forms my raison d’etre here at FP Advance.
I realise I can’t change everyone’s values, let alone a whole industry, or the world. However, I can make a difference to clients and businesses one by one.
My mission is to turn the financial services industry upside down, one firm at a time, so that the advisers that should get rewarded, get rewarded.
I do that by working with the willing; those firms and advisers that want to do things right. They see the importance in being client centric and serving others. Putting something back into the communities which they operate in, by:
Giving sound advice
Recommending investment strategies that work
Employing people
Setting a good example
Mentoring less experienced industry participants
Leaving a legacy for the future
Focusing on their own behaviour and example, rather than worrying about what everyone else is doing
Tell the truth
Good financial planners are ‘democratisers of information’. They let their clients in on the truth. They admit that they are unable to pick markets or identify the top performing fund managers in advance, because it’s very difficult to do. They focus on asking great questions and helping clients to solve their own issues. Performing what Daniel Pink, author and one of the world’s leading business thinkers, says is the highest value skill; problem identification, not just problem solving.
Bad advisers are still looking to make things complicated or confusing.
I’m not saying the bad advisers are bad people. I suspect there are very few genuine rotten eggs in our profession. However, by failing to seek out the truth for themselves, they choose to keep themselves stuck in the past and by extension, do the same thing to their clients.
The fear factor
What drives that behaviour in otherwise decent people? Fear.
They are scared that if they uncover the truth, they’ll have to do something with it and tell their clients about it.
For me, the funds management industry is the classic example. I’ve heard debates and arguments for years on the topic: do active managers outperform after fees? The evidence is overwhelming; no they don’t. There’s lots of talk that they do, but there’s not much evidence.
In the age of Google where we have access to all the information man has ever created at our fingertips, I like this quote from Charles Ellis in his book, Winning The Loser’s Game:
“Active investors can do better, and some will do better some of the time. But if certain mutual fund managers had been doing significantly better for several years – particularly after taxes, fees, expenses and errors – don’t you suppose that with everyone looking, we’d all know which funds they manage?”
The truth is out there
I don’t want to get bogged down on this one, as people like financial journalist Robin Powell and others have fought long and hard to get the truth out there. However, it provides a very good example of how entrenched certain interests can become.
The real issue is about what we want to be part of. In your case as advisers and business owners. In my case as a consultant and ex-adviser, who believes strongly in the work that good advisers do.
For me the answer is simple: I have to live true to my own values to be happy and fulfilled. That means trying very hard to do things right. In my business relationships that means it has to be win/win, not win/lose, or lose/win.
I want to be, and am, part of a movement for change.
I know there are scores of advisers and business owners out there that feel the same way, and strive daily to live to their own core values. You are part of that movement too.
My feeling is that we are growing in number. When I first arrived here in the UK in 2004, the audience for genuine financial planning was small. Every year more and more advisers start to move across to this client-centred way of doing business.
Be the change
Do you make a difference?
You. The small quiet voice in your part of the country.
Yes, you do.
Walk the talk. Be the change you want to see in the world. Let’s speak up for what we believe in and, wherever we find ourselves not quite upholding a standard, address it and improve.
For me that’s my lifetime journey. I hope you can identify what your true motivation for building something magnificent within your client base or your business is.
Good luck with it.
