Experience and excellence are not expensive – they’re priceless!

Recently, I was reminded of Plato’s famous Allegory of the Cave that I first read two decades ago while I was a student at university. Plato wrote about prisoners in a cave, watching shadows that they accept as real. One prisoner frees himself of his shackles, leaves the cave sees the sun, and returns to the darkness, temporarily blinded by the sun’s brilliance. His fellow prisoners think he is crazy, yet he knows they live a life of illusion. He is bound by his innate need to free them from their mental chains. The moral of Plato’s allegory of the cave as it has been interpreted through the millenniums is that we all have the responsibility to speak our truths to ourselves and our communities however uncomfortable the effect of telling these truths might be felt by its messenger.

This is reminiscent of Han Christian Anderson’s story “The Emperor’s New Clothes,” in which prevailing beliefs blind people to the naked truth and it is only through an incent child who points out the obvious truth that the king had been swindled by his two new tailors as he parades himself through the streets of his kingdom in nothing more than his birthday suit.

My intention for this month’s column is to be controversial and I want to state for the record that I give no apologies for stating my opinion. The views taken in this article are mine alone and I take full ownership of them. There are in my judgment, two main reasons why many in the financial advisory community in Canada today are reluctant to have convictions and a well-formed belief system that guides themselves in their personal lives and in their professional practices. 1) To do so requires coming to terms with one’s own mortality in both one’s career and life. 2) It requires having clear convictions, making judgments and having an opinion of what is right and wrong and believing in something deeply.

I have been inspired to write this article due to an incident I experienced first hand in the brokerage industry. This experience acts as a metaphor for what is wrong with the entire structure of that industry. I believe structures create certain outcomes, thus bad structures create bad outcomes. Good people working in bad structures have the deck stacked against them however good intentioned they are, these structures will win out in the end by creating less than favorable results for all involved. This is why it is absolutely imperative to work within a good structure.

Over the last few years, I have developed several educational courses for the brokerage, banking and insurance industries, my story begins when I was asked by one of the largest educational providers in this market space to create the first course offered on a new topic in the benefit and pension industry that has been gaining in popularity amongst successful business owners. Soon after this course was released one of the largest bank-owned investment brokerage firms with a sales force over 1500 brokers purchased several hundred units of this course. Their one condition placed on their purchase was that they would customize it to suit their end objectives and structure.

To my great surprise, disbelief, and disappointment their edited vision had gutted the most important and valuable information contained within the original course content that I absolutely believed that anyone offering these tax and benefits solutions needed to know. I can only surmise that this was done because this financial organization’s only objective was to educate its brokers just enough to be able to sell this concept yet keep their brokers in the dark so they would be fully dependent on their employer.

The analogy that I liken the above experience to is the following: Imagine buying yourself your dream car from a dealership that promises that they have superb service. Sometime later something terrible goes wrong with your dream car. You then take your dream car back to the dealership to be looked at to find out what is wrong. At the service area, you are met by a service attendant who has no training in fixing your model of car or for that matter no experience ever fixing any car. This employee proceeds to type in your VIN and Licence Number. You ask “what is wrong with my dream car?” The service attendant replies “I can’t help you.” It then downs on you that this service attendant can’t say or won’t say because he doesn’t have the slightest idea because he is ill-trained to know anything meaningful about your car or cars in general.

You then proceed to ask if you can speak to someone at the dealership that can tell you what is wrong with your car and how they are going to fix it. The service attendant turns to you and says “sorry we don’t have anyone on the premises that can help you; we will have to send your car back to Italy for our secrete magical mechanical elves to look under your hood to determine if they can do anything to fix your dream car. You leave the dealership with the new understanding that your car is not so much your dream car but actually your lemon.

Buyer beware of wolves in sheep’s clothing

Well, that is exactly how things are at the large bank-owned brokerage firms here in Canada work, where clients mistakenly think they are getting a standard of care akin to clients of doctors, lawyers, and Chartered Accountants. Most of the wealth management advice in this country is given by people who have not been accredited by recognized self-regulating bodies. Thus these people are ill-trained academically, ethically and professionally. The typical broker at a bank, insurance company or brokerage firm is hired through an ad placed by an employer who requires the broker to have high school education. The broker’s primary skillset would be his or her ability to sell products, which is where most of the “training” the broker gets from his or her employer is directed.

If you are shopping for a financial planner, take heed of these important facts. If your planner works for a brokerage firm, you should know in advance that the plan will conclude with a recommendation that you get rid of your current investments and buy some new ones at the brokerage firm. If your choice of planner works for an insurance company, the plan will conclude that your best investment strategies are the insurance and mutual fund products offered by the insurance company. This is not merely a cynical observation on my part; it is how financial sales courses are taught in the real world. I once read a popular financial sales textbook that actually closes a chapter on presenting results to a client with the instruction to, “… and then explain why your insurance policy/annuity/ mutual fund/managed account program will best serve the client’s future needs.” The esteemed authors of the textbook apparently saw no irony in suggesting that the most appropriate investment strategy depends on who wrote the plan and what they are selling. Just keep in mind that financial plans are generally written by people that they want to also sell you a product, not provide you with an enduring service.

The best advice that I can give to a public accountant acting as a fiduciary protecting the best interests of your clients is to have a list of CERTIFIED FINANCIAL PLANNERS who are both technically and emotionally equipped to assist and know what to do if things break down. This is tremendous value-added for you and will not only be a great help to your clientele but will move them on toward being “Highly Satisfied” with your service and recommend your services to friends and family when their time comes. There is a huge economic difference between merely “satisfied” clients and “Highly Satisfied” clients as demonstrated in a study by Russ Alan Prince and put forward in his book “The Private Client Lawyer.” You may think you have little in common with a Private Client Lawyer, but you are both in the Professional Services Business and many of the same dynamics affect you both.

In this study, it was found that Highly Satisfied clients add significantly to the bottom line through additional personal business and referrals to their family, friends and other associates while, amazingly, it appears Satisfied clients could actually detract from earnings by informing others to avoid their lawyer. What really makes the difference between the two? The Lawyers who are “client-centered” rather than “task-centered” have greater success in creating Highly Satisfied clients.

You can too. Do you really think in terms of the needs of your clients or in terms of performing the service? If you are focused on the service rather than on the people who are your clients, you run a good chance of having merely Satisfied clients. Focus on the people and you will have a much greater chance of producing Highly Satisfied clients.

As a safeguard to protecting your practice and your clients’ best interests consider working with an accredited fee-for-service financial advisor who has a financial incentive to take as much time as necessary to complete the work you need – but no incentive to steer you or your clients towards any particular product. Some investors balk at paying an hourly fee for something they think they can get for free. But in the case of advice, doing that can be considered “penny wise and pound foolish.”

Remember these wise words of Mahatma Gandhi’s “You must be the change you want to see in the world”.


  1. Sherry Hehr

    I feel strong about paying for services and especially for a few only advisor. I have seen Jim in the past and the advice was more than worth the fee. I would love to see him again but I understand he is quite busy. Are there other fee only advisors in Edmonton (or area) that provide advice for strictly a fee? Thank you

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