What Would The Product Mix Of Most Advisers Look Like

Business, Ethics.

Is the financial services industry failing the baby boomer generation? - are advisers really compensated to act in their client' s best interest or are they in conflict with the best interest of the client' s? If Boomers are seeking competent and trusted advisers that will act according to their best interest, are we giving them the proof that we can do that?

Do we really incent the behavior that we seek? - much as been written about the vast amount of wealth that has begun to transfer from one generation to another over the next 15 years. Never before have so many households needed competent, trusted advisors to help them navigate their wealth into the future. It has been estimated that approximately$ 14 trillion in assets involving over 70 million households will begin to migrate over the next decade and beyond. Whether it' s their intent to pass the assets along to their heirs or to their favorite charity or foundation, they need the guidance of a competent and trusted advisor. But, are we prepared, as an industry to meet the needs of the largest group of consumers ever amassed in our country' s history?

Never before has financial planning been so desperately needed by so many. - are compensation plans aligned with the best interest of the client, across the board? Are the plans in conflict with the company' s desired outcome? Can advisers truly act in the best interest of their client' s and still be successful? Aren' t most plans still designed around the amount of commission and fees an adviser generates? Yes, investment advisory accounts and the assets in those accounts are increasing in popularity, but by all estimates the total percentage of accounts in advisory accounts has just recently crossed into double digit territory.

Don' t we tell advisers to develop long term relationships with their clients, to think in terms of households and cross selling opportunities, we based their, yet compensation on the amount of revenue generated? - why isn' t the" win/ win" scenario of the advisory account gaining more traction? What if. Following the money trail might reveal the answer - look at compensation plans. Advisers were paid to gather assets and to develop relationships? Wouldn' t that encourage the nurturing of long term relationships? What if advisers were paid an annual trail based on the anniversary of the assets being held - the longer the client retains the assets with the adviser, the higher the payout.

Wouldn' t that encourage transactions that are in the client' s best interest, without regard for the generation of fees? - or what if the product cost and its risk profile were correlated for revenue? Here' s a big one - what if all investment products( packaged or not, insurance based or not) paid the same revenue stream? What would the product mix of most advisers look like? Aren' t we still paying for business the old way and expecting advisers to find business the new way? Isn' t it time for our compensation measurements to be changed and updated?

Just look at the number of lawsuits surrounding the" overtime pay" issue and you will realize that we have to look at our business differently. - change is hard, but it' s good, too! Those lawsuits seem to be gaining ground and changing the landscape. There are 70 million households with over$ 14 trillion in assets looking for an answer. We should deliver it.