Advice is relatively easy to come by; it’s finding quality advice that is difficult. This goes for advice on how to invest your 401(k) to how to best roast a turkey. Perhaps this is why so few financial planners charge for their advice, because maybe they haven’t educated their clients on the value of it. Seeing that I’ve based my entire practice on giving advice, how people perceive the value of this advice is crucial to my business.
I seek advice from family members, friends, and other business owners on a variety of topics but there usually is an exchange of advice-for-advice and there are certain people I know to go to for certain types of guidance. I also consult with a few business coaches that I either compensate or trade services with. Perhaps there lies the difference; these business coaches are professionals; they know what they’re talking about. Advice from your Facebook friends on what to bring for Thanksgiving dinner is different from advice from a professional about how to structure your marketing program. It’s no less valuable, but the circumstances -the stakes- are more critical and, therefore, the advice is worth trading something of value for.
I think -and please correct me if I’m wrong- that many people have come to devalue advice, especially when it comes from so-called financial advisors, because such advisors may have had conflicts of interest if they sell financial products. For example, if one product offers the advisor $100 in compensation, another offers $500 and another offers the advisor $1000, which one do you think the advisor is likely to recommend? Sure there are those who will present and recommend the lower priced options, but why even have that conflict? As a CERTIFIED FINANCIAL PLANNER TM professional, I am required to act as a fiduciary; to always act in the best interest of my clients. I decided to take the product problems out of the equation when I started my practice. Not only because I think good advice can change your life but because I’ve never been good at selling (hence my need for a sales coach: Bill Knoche, remarkable guy).
I often ask people what is the best and worst financial advice they ever received and while some recall these circumstances with ease, many do not. Perhaps because they disregarded all financial advice as possibly faulty.
And then there’s the problem of actually acting on the advice. Why do you suppose many people don’t do as they’re told? (This, incidentally, is why I got interested in behavioral finance; I wanted to understand why people did the things they did with their money.)
With the economy so sluggish, most people are questioning -rightly- their spending, and paying for advice is no different. I suppose each person has to use her/his best judgment to determine whether the guidance will truly help them achieve what it is they want to achieve; be it a clean, organized house, better sales results, improved social media presence, a dog who is crate trained, or a better financial position.
Photo courtesy of ClipArt.
Sometimes people want to get one person’s advice verified or confirmed by another person before they act on it (especially if the recommendor is in a position to gain from their recommendation)…kind of like a second opinion in the medical world. Maybe it’s a matter of trust or credibility. When my insurance agent told me to buy LTC, Disability and Life Insurance, I did it without question, because I trusted him, and felt he was looking out for my best interests. Like you said, if someone has a monetary interest in recommending one product over another, the buyer might be hesitant to follow the advice based on them wondering if it’s in THEIR best interest or their ADVISOR’S best interest to have that product. It might be a matter of trust. In this volatile market, people might be more interested in hearing a few people make the same recommendation before they act…just to be sure it’s the right course for them. I think you are in a great position to advise because you don’t have that “product commission” issue hanging over your head. You are 100% looking out for the client.