More
trustworthy than plumbers and lawyers
The
business of financial planning is as much, if not more, about trust than about
money. Ask any financial advisor for the key to her relationships with clients,
and she’ll tell you it’s ‘trust’ – as with any relationship. A recent survey
suggests that individuals don’t hold their advisors in very high regard,
overall.
Survey
says…
Ipsos-Reid,
in conjunction with Reader’s Digest polled more than a thousand Canadian adults
about the individuals and industries they trust most. It will come as no
surprise that the medical profession was found atop both lists. Interestingly,
the people to whom many Canadians entrust the fate of their life savings landed
only around the middle of the pack.
Out of 26
professions, financial advisors ranked twelfth – sandwiched between
chiropractors and plumbers. Of 29 industries, financial planning came in at
#14, with investment advisory at #18. (Interestingly, lawyers ranked
eighteenth; which national politicians and tobacco ranked last in both lists.)
So, what
does this say about the state of the very industry from which I derive my
living? I’d say it’s suffering from something of an image problem.
The press
release summarizing the results along with a few charts can be found here.
The survey
supports my observation over the past couple of years, which is that many
people are unhappy with their financial advisors. But the flipside is that most
people need advisors. So why are so many people having difficulty finding
somebody they can trust?
Expectations
and regulations play big roles in all of this.
I can’t
tell you how much e-mail I get from people desperate to dump their current
advisor and hoping that I can come up with their financial knight in shining
armour.
But the
fact remains that people enter relationships with advisors expecting them to
work small miracles. When they don’t – i.e. when they fall short of
expectations – they disappoint their clients.
The other
side of that coin is that many advisors talk a good game and are partly to
blame for the unrealistic expectations held out by some of their clients.
With what
is known in our industry as the big “sales season” well underway, you’ll no
doubt be inundated with solicitations of some sort over the next five weeks
trying to lure you to contribute to your RRSP.
Those
advisors pushing today’s hottest investments are likely those that should rank
equally with national politicians. And as we saw in last
week’s column, you owe it to yourself and your net worth to resist that
urge – as tempting as it may be.
In any
event, if you’re even thinking of switching advisors, this is not the time to
do it. The holidays have just ended; you’re now thinking about what to
contribute to your RRSP; and then comes the season to file tax returns.
The
point: don’t make such a critical
choice in the midst of so much going on. Make the decision to change advisors,
fine, but don’t actually do it until you’ve had the time to think about what
you want and need – and to go out and interview some good candidates.
I won’t
rehash old material, except to point out that it exists. About a year ago, I
wrote two articles in this space on advice and finding your ideal advisor – Gauge
your needs and Tips
from a professional. I think it’s time to revisit those previous articles
to get you in the mindset of what you need to do when that time comes.
My next two
articles will focus on providing ideas for your RRSP contributions.
Dan Hallett, B.Comm., CFP, CFA is the Senior
Investment Analyst with Sterling Mutuals Inc. He can be reached at dhallett@sterlingmutuals.com Sterling Mutuals Inc. is registered as a
mutual fund dealer in Ontario, British Columbia, Alberta, and Manitoba.