the broken typewriter

By Brad Brain

It’s no secret. I can be quite unpleasant to deal with.

Right now, I am trying to get some stuff done in my personal life. It’s not going well, and I keep finding myself tearing a strip off of various people. Sometimes I do it politely. Sometimes I don’t.

Admittedly I could be more patient. Nonetheless, it really irritates me when people tell me they are going to do the job that they are being paid for, and then they don’t even bother to show up. Even further, it really, really irritates me when people will say anything, regardless of truthfulness, in order to get paid.

So why does my personal pain warrant a mention in a financial planning column?

Well, unfortunately, overpromising and underdelivering is a problematic issue in the financial world as well.

Typically overpromising and underdelivering comes in two forms: financial advisors overstating their abilities, and the assurance of favourable outcomes.

Folks, here’s the unfortunate truth about life. Just because someone says some words, that doesn’t mean those words are correct.

There are some advisors out there who will be quick to tell you what a great job they will do for you, and how the company that they represent is the best company in the world.

Here is something that I have noticed. Often the people who tell you how great their firm is either work for multi-level marketing firms, or they have been in the business for less than three years.

To be fair, these advisors may simply not know any better. Their company tells them that they are absolutely the best company out there, and the advisor takes the corporate propaganda at face value.

The reality is that there are lots of fine financial advisory firms out there. And, honestly, it’s the quality of the advisor that you are working with that is orders of magnitude more impactful than the firm that they work for. A great advisor can do good work regardless of what firm they are with, but a lousy advisor at a good firm is still a lousy advisor.

I go to a lot of conferences and events for financial advisors. One thing I have noticed is that advisors with the biggest egos often have the least to brag about. I have also noticed that many of these companies that like to tell people how good they are don’t send their advisors to high level events.

Real financial planners talk about solving client problems. They don’t need to talk about how good their firm is, they are too busy trying to help you reach your financial goals.

A different version of the overpromising and underdelivering booby trap is when advisors start promising favourable outcomes. Maybe they infer that their products will outperform everything else, or that they have access to the best fund managers, or they know what the markets or going to do, etc. It’s going to be some version of them having the upper hand on future events.

The reality is that knowing the future is a skill set that no human possesses. Anyone that tells you that they know exactly what will happen next is trying to sell you something.

Real financial advisors deal with what is controllable. Asset allocation. Tax sheltering. Diversification. Protection. Savings rates. Goals-based planning. There is no fortune-telling necessary for financial success, just make good decisions that are consistent with your objectives.

Beware advisors that make bold promises. They are setting you up for overpromising and underdelivering.

Here are some of the things that you can ask someone that wants to be your financial advisor:

• What are your credentials?
• How long have you been a full-time financial advisor?
• How do you get paid?
• What are my all-in costs?
• What products are you licensed to discuss?
• Do you only use your own firm’s proprietary products?
• What happens if I change my mind and I want to get out?

This will be uncomfortable for some people to read. Too bad.

I told you that I can be unpleasant to deal with. But clients deserve better.

Brad Brain. CFP, R.F.P., CIM, TEP is a Certified Financial Planner in Fort St John, BC. This material is prepared for general circulation and may not reflect your individual financial circumstances. Brad can be reached at www.bradbrainfinancial.com.