We need to get paid for the value we bring to each relationship.
Imagine yourself visiting a physician who tells you the following: "If you will hire me as your primary doctor I will diagnose all of your illnesses, treat you when you are ill, help you with your dieting, recommend a program for preventative care, prescribe any drugs you may need, monitor you progress, refer you to competent specialists when needed and be available to help you with any questions or concerns you may have about your health. In short, I will be your personal medical advisor." By now you are overwhelmed and believe that this is too good to be true in this age of managed care, but you ask the obvious question. "How much will this cost?" And the doctor replies, "All you need to do is buy the drugs from me."
How are you feeling? What are some of the thoughts running through your head? What has the doctor communicated is the most important thing he does? Are you concerned that he will be compelled to prescribe drugs in order to be paid? Are you worried that you may not need these drugs? Would you rather pay him a retainer for his medical advice and let you buy the drugs on you own? Of course, doctors no longer sell drugs and they get paid for their core competencies-their ability to diagnose and treat illnesses. Why should financial planning be any different? Why do we earn most of our compensation from the commodities we offer and get paid little or nothing for the most valuable services and advice we give? If we were to list what we do for our clients, how would we rank them in importance?
Discovering our clients needs and goals (performing the physical)
Analyzing their current situation and determining if there will be shortfalls (diagnosing the illness)
Recommending financially viable solutions (prescribing the treatment)
Helping them implement the recommendations (treating the patient)
Monitoring their progress (annual physicals)
Building a portfolio (prescribing drugs)
Implementing investment decisions (buying the drugs)
I would postulate that the least important service listed is implementing the investments, yet that is still how most financial planners get paid. Some planners I know tell me that financial planning is a "loss leader." How can the most important service we provide-our core competency-be something we lose money on, while the commodity we offer (investment management) is the primary source of our income? If financial planning is to become the respected profession I know it can be, we need to be paid for the most important thing we bring to every relationship-our wisdom. Our clients can find and implement investments on the Internet, but they will never find the wisdom of a competent and caring financial planner who can make the difference between financial success and failure for so many people.