Stereotypes persist. You might introduce yourself as a financial advisor, financial planner, RIA or even a personal banker. You might describe yourself as a money manager. If you have clients, suggest investments and charge fees, most people will consider you a “broker” which is short for stockbroker. How do people feel about them?
1. The “broker” on TV and in films.
They are often cast as the villain, either trading on insider information, embezzling money from clients or only interested in the fees they collect. They are rarely considered as altruistic characters, more like “The Wolf of Wall Street.” Financial advisors aren’t the only ones getting this negative treatment: Investment bankers, hedge fund managers, private equity and heads of financial firms are all usually cast as villains.
What can you do about it: There is not much, other than to explain you work in a regulated industry and seek long term relationships. These only follow when you treat people as you would want to be treated yourself.
2. What do they read in the newspaper?
If you read industry publications written for a financial advisor readership, you will be amazed at the headline stories. You have stories of advisors who shoot someone, steal from someone or commit other horrible crimes. Every so often the mainstream press runs a story about a massive investment fraud and the celebrities who lost money. It sounds like “brokers” work in a dishonest profession. Insidermoney.com ran an article about the 15 most untrustworthy professions (1) Stockbrokers were #5, with 39% of respondents “ranking them low on honesty and ethics.” They were worse than insurance salespeople (38%), but better than advertising people. (40%).
What can you do about it: Friends know you are honest. When surveys are done about politicians, although the majority might rate the US Congress very low, they tend to rate their own representative very highly. In you don’t have a personal relationship with the person across from you, lean on the reputation of your firm.
3. It’s a transactional business.
Years ago, someone ran an ad. (I forget who.) The message was: “It’s the end of the month. You broker calls with a trade. Is that trade in your best interests or theirs?” The impression is “brokers” churn accounts to generate commissions.
What can you do about it: This is easier. It was a transactional business years ago. Today, most pricing is asset based. It’s a pay as you go system. You are only paying when you are using the program.
4. The stock market is a scary place.
Many people have a fear of the stock market. They think they bring bad luck or bad things happen to them. If they go to the beach and gradually walk into the ocean, a wave will hit them in the head and knock them down. They will choose the wrong investments or get bade advice.
What can you do about it? Not everyone should invest in the stock market. That is what risk profiling is meant to identify. Not everyone wants to take responsibility for their money, specifically when it comes to choosing stocks. These people, if they choose to invest, can but an index fund allowing them to “own the broad market” or they can hire a few money managers who make the day to day decisions for them.
5. They fear losing control.
They worry their “broker” isn’t paying attention. They were sold something and they have some responsibility for paying attention. They feel they might own the right stocks for all the right reasons, but if the stock market declines 10% over time, they will lose money. They also fear if the market drops suddenly, they will lose money before they (and their broker) have a chance to react.
What can you do about it? The client needs to buy into the concept of investing for the long term. They should not lose sleep over house prices because they have no immediate intention of selling. They need to believe the economy should grow over time and this is money they will not need to touch for a long time.
6. They think the broker lacks experience.
People know doctors need to go to school for a long time before they can practice. They know lawyers need to pass the bar exam before they can practice. They know accountants have to go to school and pass tests to become a CPA. They think someone can walk through the door of your office, get hired and start handing out advice without any experience.
What can you do about it? Friends might feel this way if you recently changed careers. You were a great pilot, but what do you know about stocks? You need to let them know you are not a stock picker, you are a relationship manager. You hold several licenses. You might be part of a team, so lean on the combined experience of the team. Sell the firm’s credentials. The client is not simply hiring a person, they are hiring the firm.
7. Brokers lack specialized knowledge.
People have problems. They do not consider them generic. Suppose the prospect is a college professor. They have a retirement plan that is different from an advertising executive or a dry cleaner. They want someone who has been in their shoes or solved a problem similar to theirs.
What can you do about it? Many advisors cultivate niche markets for this reason. This is when you lean on the expertise of the firm and the specialists you can bring into the discussion. This highlights your role as a relationship manager. When you see your family doctor, they often diagnose the problem and send you to a specialist. It’s similar logic.
8. Brokers are only interested in closing the sale for new business.
When you buy a car, you get lots of attention from the salesperson, but once you own the car, they are no longer in the picture. They are selling someone else a car. You now interact with the service department. They do not believe you want a long term relationship.
What can you do about it? In this instance, you are the service department. You will be reviewing their financial plan, meeting for portfolio reviews and modifying the plan alongside them as their circumstances change. Layout out the schedule of future contact points helps get this message across.
9. They don’t identify with the broker.
This can be a problem. When I transitioned from an advisor into management, my accounts were reassigned to other advisors in the office. One of my former clients got in touch and said: “When we met the new guy, one of the first things he did was to pull out a design magazine and show us his house was featured on the cover.” If there is a wealth gap, this can be an issue. There can also be a cultural gap. People often say: “I want an advisor who looks like me.” This can mean, “Has traveled the same journey as me.”
What can you do about it? There are several solutions. Be kind. One is to let them know they are the most important person in the room when they meet with you. Another is to introduce your team and have them present at the initial meeting. They might bond with another team member. It is important to speak in simple terms, even if you need to say: “I realize you know this, but I want to review the basics…” If you can sense this isn’t going to be a good fit, you can look at connecting them with another advisor in the office.
Stereotypes are an issue, but they can fade into the background once people get to know you.
Related: Is Financial Planning Worth Paying Money To Get It?