From time to time I’m asked, Glenn: there are plenty of financial guys out there. They’ll do financial planning for free. So why should I pay you guys?
Good question, and not unexpected in these days of free resources online. To answer it, let me give you a little background.
Back say, 50 years ago, if you needed professional financial advice, from whom could you get it?
What’s the issue about taking advice from these providers? It is the potential for conflict of interest. What do I mean by that? Well, the banker wants to open time deposit accounts and initiate loans. The stockbroker wants to trade stocks in your account. The insurance agent makes a living selling policies. The accountant, on the other hand, focuses on preparing financial statements and doing tax returns. See my blog post about the advice industry here.
Now see where I’m going with conflict of interest? If the banker recommends a one-year CD, is it because that is the best recommendation he has for you, given the facts and circumstances of the entirety of your personal finances? Or is it because he has a monthly dollar goal of new assets to bring into the bank? If the insurance agent recommends a policy for you, is it because that policy is the best product out there to solve your particular financial issue? Or is it because he has a production requirement and needs to make a commission? How can you be sure?
Now don’t get me wrong. There’s nothing wrong with selling on commission. If you buy a car, you know the deal – the salesman has a production requirement, and receives a commission plus other financial incentives from the dealer. He'll do his best to negotiate a deal at the highest possible price! You may leave the dealer's lot with the car you wanted, but also the suspicion that you just got hosed.
The analogy doesn’t hold up with financial services, though, in that the client seeking financial advice usually doesn’t start out looking for a particular item to purchase. Instead the person in need of financial services generally wants good, unbiased recommendations. Consequently a relationship of trust between the adviser and client is paramount.
Now let’s fast forward to 1985. The Certified Planner Board of Standards, (CFP® Board) was established to benefit the public for certification and standards-setting purposes. They established and enforce education, examination, experience, and ethics requirements for CFP® professionals. So it is the CFP® professional who is trained in comprehensive financial planning.
This training includes insurance, investment, taxation, retirement, and estate planning. The CFP® professional is trained to take a high-level view of a client’s complete financial picture, and bring all the various pieces together to the client’s benefit. In other words, your financial planner becomes the team quarterback, working with the attorney, accountant, and insurance agent to implement the client’s financial plan.
Furthermore, the CFP® professional has a fiduciary standard of client care. This means the customer’s best interests come first, foremost, and always, so you can count on receiving unbiased financial advice.
At CameronDowning, giving unbiased financial advice, always in our client’s best interests, is our living. This is not a sideline; we are not part-timers. We think, live, and breathe financial planning and investment management, for the benefit of our clients. Consequently, we charge a fee for our services, just as your accountant, attorney, and physician do.
Just as your parents always told you, you get what you pay for. Still true.
So now that you’ve thought about it, why would you ever want to entrust your entire financial future into the hands of someone who isn’t professional enough to even charge you??
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