New Book Slams Advisory Industry For American Financial Behavior; What Measures Have You Employed That Help Steer Your Clients Away From Risky Financial Practices?

Wednesday, January 02, 2013 08:44
edit
New Book Slams Advisory Industry For American Financial Behavior; What Measures Have You Employed That Help Steer Your Clients Away From Risky Financial Practices?

Tags: Advisor businesses | client education | investment strategies

A new book puts the onus of Americans’ financial behavior on the financial advisory industry.
 
Helaine Olen says in “Pound Foolish” that the failure to prevent credit card mania, the susceptibility to no-down-payment-mortgages, and the use of 401(K) funds for day trading shows the industry is more profit-focused than client-focused.

This Website Is For Financial Professionals Only


 
But just how responsible are advisors for investor behavior?
 
Olen claims that most investors are suspicious about the financial advice they receive but that they take it out of desperation.
 
She also says that financial advice over the years has been fueled by other powerful societal trends such as the self-help trend that grew out of the Great Depression.
 
During the 1950s, investing in the stock market became a form of patriotic duty. Since that time, some financial advisors have promoted themselves as consumer champions, real-estate maestros, stock pickers, and tough-love kinds of debt advisors.
 
These have all been economic trends. Technology also helped with the advent of the internet and do-it-yourself online trading sites. Before then, the flood of information the internet released was under the lock-and-key of the financial advisor.
 
The book seems to make some valid points. It’s easy to get caught up in what our clients are focused on.
 
It was also easy to see that firms who pushed product in the last few decades could have been more focused on profits than the best interests of their clients.
 
It’s always been the responsibility of the financial advisor and wealth consultants to help guide their clients toward the issues that they should be focusing on instead of the investment trends of the day.
 
The industry has done much to address this in the past few years. But there is much more work to be done and the work has to be done at a much deeper level.
 
Becoming schooled in behavioral finance is an important element in advising clients who, by human nature, tend to follow the most popular investment trends.
 
This can be particularly challenging when a client comes to you with an immediate issue of concern that results from such trends. What paths have you chosen that steer clients toward the risk areas and investment matters they should be focusing on?
 
How effective have they been and what changes, if any, do you plan to make in those methods for 2013?

Comments (0)

Write comment

You must be logged in to post a comment. Please register if you do not have an account yet.

busy