Really, Chuck? Really?
I’m actually commenting on a recent article by Chuck Jaffe (who actually wrote a very good article that is fairly well-balanced) about how Financial Planners are not professionals.
While I don’t classify myself as a financial planner, I am somewhat offended by it. Partially because the article has some truth to it. Chuck suggests that you “consumers need to find advisers they can trust, vetting any would-be counselor to make sure they are getting someone who can truly help them handle the financial chores they are unable or unwilling to do on their own”. As if the only professional you should do some due diligence on is a financial professional.
Chuck also makes reference to the fact that financial people (since he doesn’t want to say we are pros), compare themselves to physician’s (which they do, and I agree that the analogy doesn’t fit). However, the point should not be that most financial people are NOT professionals and you should do some due diligence, but that financial people need a minimum standard.
Which they have. So do accountants, physicians, attorneys, plumbers, mechanics, etc.
Why is it that when I walk into a physician’s office to get my physical, I should instantly trust that person? Because he/she went to medical school? Is it possible that with the decline in people attending medical school, the pool of really competent people has been shrunk? By walking into that office, do I KNOW that I have the right physician?
Of course not! They have met a minimum standard.
Let’s go back to Gaffe’s comparison of mechanics, which he may feel is more appropriate. The mechanic you choose might be licensed, and competent, but then again, he may be licensed and incompetent. But he has met a minimum standard. It is then up to the consumer to be discerning.
Back again to physicians. Let’s talk about when you go to the physician. Jaffe talks a lot about the fiduciary standard as opposed to the “suitability” standard. I happen to agree that planners, advisors and stockbrokers should put their clients’ interests first. But do when you go to the medical doctor for a problem, does that physician act in your best interests?
Is it in your best interests to have multiple tests run to “rule something out”? Even if they have a pretty good idea what is wrong with you? In order to not have a suit brought against them, they run these tests, which costs you money (and with the new laws, costs the U.S. taxpayer money). Is this the act of someone who is putting your interests first? Or is it the act of someone who is putting THEIR interests first? A little CYA?
It’s not my intention to blast physicians, or even Chuck Jaffe. The point I am trying to make is that there is a minimum standard for financial professionals. It does NOT mean they are qualified to specifically give you advice. They have some knowledge, but they may not be in a position to help you yet until they have gained the requisite knowledge or experience or specialization. Maybe they can help those with lesser needs.
A little bit like the other professions. You don’t put your newest mechanic to work on your best customer. But don’t lump financial pros all together and claim that they are not as professional as other careers. Be discerning, but not quick to judge.
The truth is that unfortunately it is up to the consumer to find the true professional.