Who’s the Boss?

By May 8, 2015Financial Planning

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Many years ago I was with my good friend and longtime business partner Larry McNeil when someone asked him “What’s it like being your own boss?” to which Larry replied “I’m not my own boss, I have 237 bosses”. If you were a client of Larry’s, he considered himself to be directly responsible to you in the same way an employee works for a company. His long and successful career as a commercial property and casualty agent was built upon a staunchly loyal following because of this important distinction in how he defined the client relationship.

In the financial services industry it can be hard to distinguish between advisors who work for you or for someone else. Nearly all investment people use a consultative approach but there can be vast differences in the products that are offered. Different products have different cost structures that can dramatically affect return, portability, and liquidity. If an advisor works for someone else, the products recommended will in some way be beneficial to someone else. Why? Because no company can have an employee offering products that are not profitable to its shareholders.

So, how do you distinguish between advisors who are directly responsible to their clients and those who are obligated to market products with profitability built in for their company? Look at their card or letterhead. If their card or letterhead is branded to a large financial services company then that’s probably who they work for; plain and simple.

Larry was a great mentor to me. Years prior, I had made the leap from working for a large financial services company to owning my own firm for all of the right reasons, but if asked, I would tell people I was self-employed. Larry helped me understand it was better for me to think of myself as client-employed. So it’s not my firm, it’s my client’s firm. Being client-employed, I feel I have an obligation to drive profitability for my clients and not someone else.

RS