“Brand: The name, term, design, symbol or any other feature that identifies one seller’s product distinct from those of other sellers.” –American Marketing Association Dictionary.
We all know that clear branding is important to the success of any commercial undertaking. The financial planning profession is no exception. Folks need to know what to expect. Otherwise, how can they trust?
Unfortunately, financial planning has been unable to achieve such clarity.
Even with all the work that has gone into the CFP marks and such constants as the “six-step process” and purported fidelity to the fiduciary standard, we still have an extraordinary amount of confusion and obfuscation. People do not know what they will ultimately get when they work with a financial planner—a product pitch or a professional engagement.
They can’t trust themselves. The CFP Board’s ad proves that a smile, a suit and a haircut suffice to build confidence. Moreover, financial advisor frauds are regularly exposed. Combine these with the financial services salespeople’s continued resistance to being labeled fiduciaries while cheerfully calling themselves “financial planners.”
This is our fault. Simply put, financial planning has failed to define its particular mission and purpose. Instead, we have encouraged confusion. To be specific, we have tolerated the fact that individuals with antithetical vocational callings consistently present themselves to the public as effectively fungible and interchangeable.
Let’s start with the basics. What does a financial planner do? Are we salespeople or uniquely personal advisors? Are we individual fiduciary leaders of extraordinary significance in the modern era? Or are we some amalgam? Or do we have a serious confusion factor?
I believe financial planners have a mission of working with individuals and families and their relationships with money and the awesome forces that it generates. Others would contend this mission to be the sale and placement of miscellaneous financial products and services.
Do we really even grasp the distinctions? Are those of us who proudly earn and wear the CFP marks entirely certain of our chosen profession’s priorities? I suggest the issue is centered in our relationship with financial product sales: Is the first loyalty to the client, even when products are sold? Or is the first loyalty to sales? Which master is being served?
Consider this scenario: You go to a party with lots of strangers. One of your friends identifies an individual on the other side of the room as a “financial planner.”
Now, think quick. What is your instinctive response? Does your brain register, “Excellent! A colleague. Let’s get ourselves introduced and anticipate a decent conversation for a change.” Or do you think instead, “Uh-oh, a competitor. I wonder if she’s any good?” Or does your gut reflexively respond, “Yeah, sure. OK folks, better hold on to your wallets”?
Of course, we talk among ourselves as if the words “fiduciary” and “financial planner” should be functionally interchangeable. But let’s be honest. What are your real life expectations when someone identifies him- or herself as a “financial planner”? Do you suspect the stranger is more likely to be a colleague or a source of embarrassment?
Let me go first. Even though most of my favorite people on the planet are financial planners, my own initial reactions tend toward mistrusting the qualities of those I do not know personally. While I like to talk about an authentic profession, I still tend to withhold the benefits of even conditional acceptance until I learn more about them. My skepticism hardens if they are connected to a national company.
Your turn.
And why?
I suggest it has mostly to do with the fact that we are in the middle of a muddle grounded in major confusion. Who are we? Are we advisors or salespeople? Will the real financial planner please stand up?
This is not merely an academic exercise. This is an issue that has bewildered me since I came into this mostly wonderful world of financial planning over 30 years ago. The unwonderful part is how nobody, including ourselves, quite knows what financial planners do or what this work is really about.
Of course, the profession started out squarely rooted in sales. No shame there. Financial planning contains some great sales tools. But it is more. Since its beginning, more and more practitioners have recognized its potential as a learned profession and have sought to elevate it. It has gained footholds in colleges and universities and spread throughout the world. It has declared itself to comprise fiduciaries and become effectively sophisticated in its controlling principles. We are starting to grasp its importance in the scheme of things. But the confusion remains and is not only tolerated but encouraged.
I remember the early days when my first manager declared to my recently recruited cohorts, “Financial planning is the greatest product delivery system ever created. If you do your data collection right, you will know everything of importance there is to know about the client. That knowledge should always lead to a “buy” decision. If you know that much about someone together with their most intimate priorities, you can overcome almost any objection.”
He regularly regaled us with heroic tales of his successful closes. My favorite was when he bragged about getting the app by keeping his client up past midnight, too tired to resist. The next Monday he waved the signed document proudly at our regular sales meeting and declared, “If that is not financial planning, I don’t know what is.” He was half right, of course—it wasn’t, and he didn’t.
Another favorite memory was when the titular head of my first major broker-dealer referred to financial planners en masse. “After it is said and done, aren’t we all just really in the sales business?” Wow.
As I have discussed previously, the financial services industry works overtime to create the impression that it is in the financial planning business in addition to its product manufacturing and sales functions. To counter, neither the CFP Board nor its coalition partners have yet to figure out how to effectively separate salespeople from advisors without gutting its rolls—an unacceptable act for many reasons.
The result is the sort of mishmash that fairly exemplifies “confusion.” Indeed, we have moved from “likelihood of confusion” to a virtual “certainty of confusion.”
Honestly, is this any way to run an authentic profession? I suggest that the financial planning profession has nothing more important than resolving this inherent disorder.
Remember, this is why we have trademark law. There are several good, accessible essays on the relevant issues of trademark. For my own research, I Googled “likelihood of confusion” and found excellent essays at Marklaw.com, Findlaw.com and, of course, Wikipedia. The upshot is that the entire body of trademark law is premised on the notion of avoiding confusion between products and services attempting to appeal to similar markets. Unfortunately, trademark law does not apply to occupations or vocational endeavors such as financial planning. For that we need something more—such as state licensure.
Remember, people cannot call themselves dentists, barbers or many other occupations without getting a license. Those terms are regulated through state law and generally premised on demonstrations of competency and legally established definitions. Unfortunately, it remains a sad truth that anyone can, with impunity, label himself a “financial planner.”
It is fun to look into the word “confusion.” As if to prove the point, a Google search produces some 39,400,000 results. An AOL search yields 147,000,000. (Yes, that is “million” with an “M.”) The clip art alone is worth the price of admission.
As if these circumstances weren’t confusing enough, the problems are exacerbated within the CFP world. The problems come with complex interplay between advice and sales. Ideally, CFP professionals consider themselves to be fiduciary advisors to their clients. Indeed, the CFP marks are so attractive because of our strong stated commitments for putting the clients’ interests first.
Would that it were always so. Many use the CFP marks to augment their apparent credentials just for sales purposes. The problems come in several sticky gray areas. First, we have those whose employment circumstances require that the first loyalty is to an employer, namely the folks who have an agency relationship. Next, we have those successors to my first manager who believe the most important function of a financial plan is to pound sales. They will look you square in the eye and tell you that they are “advisors” when they put together their financial plans but “buyer beware” salesmen when it comes to implementation. They take off one hat and put on another with nary a thought about conflict or confusion.
To be clear, I see nothing remotely wrong with sales as such. The problems come when the sales function is camouflaged by a purported advisory function that induces trust, confidence and reliance, namely the stuff of a fiduciary relationship.
In order to get specific with my terms, I went trolling at the Merriam-Webster store. I found some relevant definitions:
Salesperson
1. a person whose job is to sell things, or Advisor
1. one who offers advice
Sell
1. give or hand over something in exchange for money
2. persuade someone of the merits of
Advice
1. guidance or recommendations concerning prudent future action, typically given by someone regarded as knowledgeable or authoritative
Advise
1. to give an opinion or suggestion to someone about what should be done : to give advice to someone
Confusion
1. disturbance of consciousness characterized by inability to engage in orderly thought or by lack of power to distinguish, choose or act decisively
Fiduciary
of, relating to, or involving a confidence or trust: as
a : held or founded in trust or confidence
b : holding in trust
c : depending on public confidence for value or currency <fiduciary fiat money>
“In law, a person in a position of authority whom the law obligates to act solely on behalf of the person he or she represents and in good faith. Examples of fiduciaries are agents, executors, trustees, guardians, and officers of corporations. Unlike people in ordinary business relationships, fiduciaries may not seek personal benefit from their transactions with those they represent.”
This business of “fiduciary” is simply not that hard to grasp. If we ask for trust and confidence, we need to live it and earn it. This renders deception unacceptable, intolerable and beyond the pale. This doesn’t mean we can’t make money within the context of a financial planning relationship. It doesn’t even mean we can’t sell appropriate financial products. It just means we have to work within the bounds of trust and confidence—for real—no hat dances permitted.
A reasonable test involves thinking of your mother. Would you want her to know how you have treated your client? Or how would you feel if someone treated your mother as you have treated a particular client who has trusted you implicitly?
The CFP Board says it “aspires” to a uniform fiduciary standard. Yet we all know that “financial planning” is being used more for sales than advice by too, too many of our fellow CFP licensees.
Frankly, I don’t think any of these terms are particularly ambiguous or hard to grasp. I just don’t find much common ground between the terms “advice” and “sales.”
At the end of the day, “CFP” must stand unambiguously as both the trademark and hallmark of fiduciary advice. Understanding that financial planners are neither angels nor saints, the client must have the unassailable confidence that his CFP advisor can be trusted to serve his interests first and ahead of any others, including those of employers or monthly sales quotas.
This issue of confusion is a very big deal. Confusion is bad for professions aspiring to be perceived as authentic. Somewhere in here is the essence of confusion and blown branding.
If financial planning is to achieve the stature of an authentic profession, we must define its mission and purpose in the contexts of our fiduciary relationships and accept the responsibilities implicit in an authentic advisory profession. No confusion allowed.