At the Risk of Sounding Boastful


September 25, 2012


An article recently appeared in the Wall Street Journal titled “A Quarterback to Oversee Your Investments.” It’s about the growing trend of financial advisors overseeing many of a client’s accounts; not just the few that they directly manage.  This makes sense because diversification and tax issues need to be coordinated across all accounts.


To view the article, please click here.


At the risk of sounding boastful, I thought you would like to know this is a service we pioneered over 12 years ago. We are a boutique firm without the bravado of high profile firms, but we are not afraid to look outside the box and bring you beneficial services that go against industry norms.


The next change that needs to take hold in the financial services industry is how advisors are compensated.


Most advisors who work with affluent households are paid based on managing investments. They are financially incentivized to gather and manage investments, not address non-investment concerns.


Yet affluent households understand that investments are an important but incomplete part of their total financial health. They often have non-investment questions like:  Are we on track for retirement? Can we afford a second home? Do we need long-term care insurance?


When important questions go unanswered, people are not as confident as they could be. That’s a shame because when people don’t feel good about their money, they worry more and don’t feel in control of their future. It can also affect other areas of their lives – careers, relationships, and hesitancy to pursue passions are some areas that come to mind. 


A better approach is for the advisor to be financially incentivized to grow the clients overall net worth. This approach avoids most conflicts of interest and gives the advisor the latitude to address the client’s most pressing needs and questions like those mentioned above.


Although more advisors are starting to offer the services of a financial “quarterback,” they are not changing their compensation structure to avoid conflicts of interest.


Am I optimistic that advisors will change their compensation structure so that it meets the client’s needs better?  I am disappointed to say that the answer is “No”.