Which brings us to the other major enablers of this thinking-ourselves. Dare I quote Pogo, who said, "We have met the enemy and they are us"? I remember years ago when the typical question one was asked at a meeting for financial advisors was, "Who is your broker-dealer?" Now it seems to be, "What are your assets under management?" Perhaps a more relevant question, if one needs to be asked at all, would be, "How many clients does your firm serve?" If you have read any of the articles I've written in the past, you probably know by now that I don't believe financial planning will ever become the profession we want it to be if we insist on being compensated for the assets we manage as opposed to the advice we provide. At a recent meeting where I spoke to discuss these issues, one of the attendees asked me, "How do you give yourself a raise if you do not charge a percentage of assets?" My answer was that we neither give ourselves a raise nor take a pay cut for conditions over which we have no control such as the market. Businesses give themselves "raises" in two ways: by providing excellent services for which they can earn more money, or by bringing in new business. Why should financial planning be any different from that?
Getting back to that individual who complained that his client saw him as a money manager. I asked him how he was paid by his clients. He told me that he charged a percentage of assets. Why, I asked him, would his clients think of him as anything but an asset manager if that was how he was paid? He told me that he did comprehensive planning, and that charging fees for AUM was simply a convenience. "But what is your core competency?" I asked him. "Financial planning," he replied. In my opinion, until his fees reflect that, he is likely to continue being considered a money manager.
We have made much progress over the years, but there is still much work to be done before we can proclaim financial planning to be a profession. We must continue to work on the regulators, the media and, most important, ourselves.
Roy Diliberto is chairman and founder of RTD Financial Advisors Inc. in Philadelphia.