Have we, as an industry, lost our way?Article added by Lew Nason on November 8, 2010
Lew Nason

Lew Nason

Dallas, GA

Joined: October 13, 2006

My Company

Insurance Pro Shop

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In a recent discussion with a financial adviser who sought help to grow his practice, I brought up the legendary Mehdi Fakharzadeh, the most successful living and active insurance sales agent in the United States. I told him about Mehdi and his accomplishments, and was surprised when this advisor told me that because Medhi doesn't sell investments, he is not really a financial adviser; he is just a life insurance agent.

Unfortunately, too many of the people inside and outside of this industry think, like the agent above, that a financial adviser is someone who primarily offers stock market-type investments, or charges a fee for investment advice. They have the wrong impression about who a financial adviser is, what they are supposed to do, and how they help people.

Unless and until we can change people's perception of our profession, most financial advisers are going to continue to struggle to make a decent living in this business. If you don't really understand what your role is as a financial adviser, then how can you help people to see the true value of your services? So, let's start by defining "financial adviser."

Here are some of the definitions I found on the Internet:
  • A financial adviser is a professional who renders investment advice and financial planning services to individuals, businesses and governments.

  • Professional adviser offering financial counsel.

  • Financial advisers are trained professionals with broad mastery of diverse finance-related topics, ranging from insurance issues to tax laws.

  • A professional offering financial advice to clients for a fee and/or commission.

  • Financial advisers provide analysis and guidance to individuals to help them with their investment decisions. They gather financial information, analyze it and make recommendations to their clients. Financial advisers assess the financial needs of individuals, providing them a wide range of options.

  • Professional who analyzes personal financial circumstances and prepares a program to meet financial needs and objectives. Financial advisers may be accountants, bankers, lawyers, insurance agents, real estate or securities brokers, or independent practitioners, and should have knowledge in the areas of wills and estate planning, retirement planning, taxes, insurance, family budgeting, debt management and investments.

  • A financial adviser helps clients develop a plan for realizing their financial objectives and provides an assessment in almost every financial area, ranging from estate planning, retirement, and taxes, to insurance, investments and savings.
What's interesting is that when you look up the definitions for a financial adviser, you'll find that they are basically the same as the definitions for a financial planner. However, what's even more interesting is that most of the definitions for a financial adviser or financial planner go far beyond just providing investment advice and investments.

Loren Dunton, considered by many to be the "Father of Financial Planning" gave us this great definition of a financial planner: "A highly trained, skilled and dedicated professional who helps average people to learn how to spend, save, invest, insure and plan wisely for the future, to achieve financial independence." You'll notice that "invest" is only one of the five basic functions of a financial planner.

    "When Loren Dunton first envisioned a financial planning profession, it was to serve the needs of the lower and middle classes, not to help the wealthy make even more money. As the saying goes, healthy people don't need a doctor."
    — Thomas W. Johnson (Financial-Planning.com, There's Something About Gary)
Today, it seems that the vast majority of organizations who use the terms "financial adviser" or "financial planner" have lost their way. They stray from the true definition of a financial adviser or planner. Most of these organizations are primarily concerned about gathering as many assets under management as possible. It has become all about making quick, easy money. There is very little, if any training about helping average people to learn how to spend, save, invest, insure and plan wisely for the future, in order to achieve financial independence.

What's caused this change in focus?
The main reason for this change in focus is that most of the organizations responsible for training financial advisers and planners are focusing almost entirely on investing in the stock market and the technical aspects of financial planning, such as estate conservation and wealth transfer. There is very little, if any, training on insurance, budgeting, taxes, etc., or training on the marketing and sales aspects of financial planning. The end result is that most financial advisers and planners do not understand that they are still and primarily sales people. Consider, if you don't know how to market and sell your services, then you are forced into taking the path of least resistance. You end up giving people what they want, instead of helping them to get what they really need. You are forced into taking the easy, quick sale in order to make a living, even when it's not really in the client's best interest. It's one of the main causes of compliance issues.

Without marketing and sales skills, you cannot help people to see why they should meet with you. Without marketing and sales skills, you cannot help people to understand the problems they face today and the value of investing in the products and services you provide.
    "Loren Dunton was a conceptual salesman, one who believed the key to the sale was sales training."
    — Edwin Morrow, CEO of the International Association of Registered Financial Consultants
This change of focus within the financial services industry is a major reason why we have serious, increasing financial problems in this country and all over the world. As financial advisers and planners, we are not addressing the real concerns and problems that most middle-income families face today. Consumer debt is out of control. Most families have very little saved for their retirement. And, it's not going to change unless we, as dedicated financial professionals, decide we are going to do something about it.

According to the Employee Benefits Research Institute’s 2009 Retirement Confidence Survey, 53 percent of workers in the U.S. have less than $25,000 in total savings and investments. The typical American household (headed by a 43-year-old) has just over $18,000 in savings.

It's time for all of us to get back to being real financial advisers and planners. We have a duty and obligation to actually help people. We need to stop focusing on investment returns and transferring wealth. We need to stop taking the easy sales. We must focus our efforts on helping average people to reduce and eliminate all of their consumer debt, protect their families and then help them to start saving for their future. And, as Loren Dunton believed, that means we need to work on developing our marketing and sales skills.

The annual saving rate, hovered close to 10 percent between 1970 and the mid-1980s; it steadily declined during the 1990s. Between 1999 and 2004, the savings rate averaged around 2 percent, until it became negative in 2005. And it's still negative in 2010.
*Bureau of Economic Analysis

Where do we start?
It all starts with each of us refocusing our efforts and learning how to truly be of service to middle-income families. It's taking an hour or more each day to learn (or re-learn) basic marketing and sales skills. It's reading everything we can about marketing and sales. It's taking industry courses — such as the LUTC classes, through NAIFA — and attending industry training events to learn about the value of the products we provide.

It's finding training and support organizations that promote working with middle-income families — finding training organizations who are not just recruiters in disguise.

It's working with real coaches and mentors such as Bill Bachrach, Don Blanton, Sandy Schussel, Maribeth Kuzmeski, Annette Bau, Jeremy Nason and myself to fine-tune your entire sales process. Joining, supporting and actively participating in industry organizations, such as National Association of Insurance and Financial Advisors (NAIFA), General Agent and Managers Association (GAMA), Million Dollar Round Table (MDRT) and the International Association of Registered Financial Consultants (IARFC), that promote working with average people.

Can you make real money serving middle-income families?
Consider that all of the major insurance companies amassed their great fortunes by working with and servicing middle-income families: Prudential, New York Life, MetLife, Northwestern Mutual, etc. All of the largest and most profitable businesses in the world today amassed their great fortunes by serving middle-income families: Wal-mart, General Motors, Ford Motor Co., Disney, Exxon, Home Depot, etc.

Industry sales legends such as Ben Feldman, John Savage, Thomas Wolff and Mehdi Fakharzadeh all initially built their practices and their fame by serving middle-income families. Legendary master agency builders Al Granum and Norman G. Levine (past president of NAIFA, MDRT and GAMA) each built their “super agencies” and their fame by serving middle-income families.

Serving middle-income families is where the real money is to be made, but only if you learn the marketing skills needed to consistently attract the right prospects and develop the sales skills needed to help people to take action — to get what they really need and want for their future.

Remember, no matter what you call yourself, you are a financial adviser and planner. You are supposed to be "helping average people to learn how to spend, save, invest, insure and plan wisely for the future, to achieve financial independence."

If we, as financial advisers and planners, don't help middle-income families, who will?
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