I watch quite a bit of golf in my spare time. PGA Tour, Champions Tour, Web.com, LPGA, it doesn’t matter. Watching top pros compete on TV gets me through the dreary northwest winter as I look forward to the next golf season. My preferred method of viewing is to record the telecast and skip over the commercials, but on one rainy Saturday I watched the entire live telecast. The commercials made me empathize with consumers of financial advice.
A carefree family sharing laughs at the dinner table. Children playing on a pristinely manicured lawn. An older couple driving a convertible on the open road with their hair flowing in the breeze. At the end of the blissful adventure, a warm voiceover proclaimed how financial advisors can improve one’s life and make dreams come true.
“Isn’t that company notorious for fleecing clients?”– Mrs. Schuurmans
Two takeaways. 1) My wife doeslisten to my rants. 2) The warmer & fuzzier the commercial, the faster I would run away.
As a qualifier, not all financial companies that run TV ads are out to separate you from your hard-earned money. Nor are all financial services ads targeting the same type of customer.
Discount Brokers– These companies compete on price, looking to take market share from old school, full-service brokers that transact via phone. This service fills a need for folks that want to manage their own money or actively trade. You might recognize their ads promoting $4.95 per trade. No issues here. Target Audience: Do-it-yourself investors or active traders
Full Service Brokers & Wirehouses– Play up the warm & fuzzy to spark emotion. An emotional consumer is more likely to make an uninformed decision. Slick ads utilize a story-basedapproach that preys on the financial novice and touts the expertise of their advisors. Corny scenarios or role plays are a staple of their marketing approach. These firms are often sales factories with high advisor burnout rates. Target Audience: Looking for a financial advisory relationship
Insurance Companies– Play up the fear factor. What happens if the market crashes? Can you afford it? Touts products that guarantee a rate of return regardless of what the stock market is doing. They want to sell you an annuity product that pays a fat commission. Bonus: it comes with a 100-page prospectus designed to confuse and obscure. Target Audience: Looking for a financial advisory relationship
Our advice is simple; don’t make emotional decisions and if it seems too good to be true, it probably is. Peaches and cream through the front door. Behind the scenes, these companies are feverishly throwing millions of dollars to delay or water-down the fiduciary standard. They want to continue to put themselves above the clients they serve.
We encourage all consumers of financial services to review Hard-Ball Questions to Ask Your Financial Advisor.