The Journal of Financial Planning is the monthly publication for members of the FPA® (Financial Planning Association®). The Journal publishes scholarly articles regarding our profession, our clients, and the public at large, as well as statistics and practice tips. Adam is an officer of the local FPA® Chapter, and both of us have been dues-paying members for years.
In the current (March) issue of the Journal, there appeared a list of statistics regarding public opinion and preferences relating to selecting a financial adviser. I found them fascinating, and decided to summarize the statistics for our audience, along with my comments in italics.
Let’s see if anything here surprises you, or if these insights will cause you to re-think using an adviser, or a change in your current adviser.
- 65% of people surveyed say they mistrust the financial services industry. We have discussed for years whether the less trustworthy practitioners in the financial services arena are our best friends (for making us look good) or our enemies (for ruining the reputation of the industry). They jury is still out.
- A whopping 2% of people say that they trust financial advisers “a lot.” Looking back to the first point, it seems that the bad guys are bad for the industry-wide reputation. I can assure you that more than 2% of financial advisers are worthy of your trust. How many more than 2%, I really couldn’t say.
- Only slightly better than the 2% of people who trust advisers “a lot” is the 15% of people who trust advisers “a little.” This one confirms my opinion that untrustworthy practitioners and salespeople actually taint the profession.
- 21% of people understand the difference between an adviser who is a fiduciary and one who is not. This is perhaps the most important distinction you should learn, know and practice. The next point illustrates this perfectly.
- 93% of people believe that a financial adviser should be legally required to place the client’s interests ahead of their own. This the very definition of a fiduciary. See the connection? (We are fiduciaries.)
- Adding insult to injury, 53% of people mistakenly believe that all financial advisers are legally required to put the best interests of the client ahead of their own. THIS IS NOT TRUE.
- 50% of investors who work with an adviser know for certain if their adviser is a fiduciary. The rest of you – ASK!!!
- 45% of people who don’t work with a financial adviser say they don’t because they believe advisers are not trustworthy. What a disgrace! You should not be afraid to consult an adviser, but you’d better know how to arm yourself with facts.
Selecting a financial adviser who will ultimately become a good fit for you and your family does not have to be difficult and time-consuming. Go to the website NAPFA.org (website of the National Association of Personal Financial Advisers®) and click the link for “Find an Adviser.” There, you can search by City or Zip Code. There you will find a list of fee-only, fiduciary advisers.
The final statistic surprised me, because only 28% of people say that their personal definition of wealth is living stress-free with peace of mind. Really? Only 28%? Got a better idea?
Van Wie Financial is fee-only. For a reason.