A trial attorney can work on contingency and will at times get up to 40% of the funds awarded if ruled in their favor. A divorce attorney asks for a retainer and applies an hourly fee to draw it down as work is done. An employment law attorney often charges a flat fee to review documents. These are just a small sample of different forms of compensation in the legal profession. The Financial Planning industry often points to the legal profession as one to aspire to for recognition as a TRUE profession compared to the fragmented collection of models we in financial services are often viewed as today. Yet, seldom does the legal outsider hear bickering within the ranks of attorneys about their forms of compensation. What defines them as a profession are their qualifications, specialized knowledge and what they do, not how they get paid. The legal industry maintains a “big tent” which helps legitimize them as a profession where it often seems like the financial services business is made up of multiple houses of worship excluding anyone who does not believe as they do. As I was quoted in the closing line of this Investment News article, “This partisan bickering has got to stop. It doesn’t do any good for the industry”
The American Bar Association is open to all attorney’s and non-attorneys who work in the legal profession. It’s a big tent. Contrast this to the financial planning Industry struggling for identity. When it was announced last week that Met Life was to become a sponsor of the FPA, it stirred a debate and criticism rooted in the concern that Met manufactures and distributes some products that have a commission. Apparently some in our business believe that one cannot be compensated by commission and fulfill a fiduciary duty to their clientele. In the article referred to above, the Met affiliation was called a “conflict of interest” and taking money from “the other side”. The other side? Really? This closed minded “my way or the highway” thinking is exactly what is keeping the industry from earning the legitimacy it so badly wants. Insurance planning and risk management are core subject areas for CFP’s and yet there is a vocal segment of the profession not wanting to have anything to do with it. I’ve actually heard some in our business say “I don’t believe in insurance” which always puzzled me since I never viewed what we do as religion.
I applaud the FPA opening the tent and much like the American Bar Association, their job is not to pick and choose which sort of professional to support, but to advance the entire profession. Like most of you, I get angered when I see an insurance only licensed salesman peddling indexed annuities at 12% commission calling themselves financial planners or investment advisors. I also get miffed when I see a “fee only financial planner” advertise their sole value proposition as being how they are compensated while all they do is not really planning and giving advice, but simply slapping a charge on an already professionally managed account. We shouldn’t average down the industry identity to the lowest common denominator. Hopefully in time, regulations will take care of that through a universal fiduciary standard for all who give “personalized investment advice”. What we need to do now is support the FPA in advancing the profession based upon what we do and not how we’re compensated. Once we gain the hard earned recognition as a profession by coming together, we can work out our differences as we evolve and grow our through our collective strengths.
“There are not more than five musical notes, yet the combinations of these five give rise to more melodies than can ever be heard. There are not more than five primary colours, yet in combinationthey produce more hues than can ever been seen.There are not more than five cardinal tastes, yet combinations ofthem yield more flavours than can ever be tasted.”
― Sun Tzu, The Art of War
“No culture can live if it attempts to be exclusive”-Mohandas Ghandi
Collective fear stimulates herd instinct, and tends to produce ferocity toward those who are not regarded as members of the herd.
"People around the world, we have a problem. Far too many of us are easily offended – and demanding frequent apologies. This clogs up the diversity roadways, and brings traffic on the road to inclusion to a crawl."
"I have found that an environment that is welcoming and highly inclusive creates increased levels of trust, which in turn results in higher levels of productivity and better outcomes."