posted on:  5/11/2006    revised: 3/8/2010

The financial industry exploited the term "financial planning" to the point where, by the end of the 1980s, it seemed that every sales person in the financial industry printed this on their business cards and letterhead. Large firms like Merrill Lynch and the major mortgage brokers drew public attention for the improper implications to consumers. It took several years for the NASD to finally issue a rule to control the use of the term "financial planning". The rule that says that sales firms like brokers, life insurance companies and banks must now disclose that any financial planning advice they may provide is only incidental to their primary purpose of selling financial products. Within the next decade even the CPA firms used this disclosure standard to adapt financial product sales as a source of additional revenue.

Some advisers, myself included, started using the term "wealth adviser" years ago to imply that the service we provided was more than about investments, money and transactions but rather a lifestyle enhancement process. The change in terminology also highlights the difference between an adviser working in an independent fiduciary role in contrast to advice that is incidental to a product sale.

This morning two contrasting e-mails came to my in-box that drew my attention and ire:

From Financial-Planning.com (where I serve as volunteer discussion moderator) -

"The affluent no longer think of wealth in terms of net worth. Baby boomers changed all that. They see wealth as a means, not an end--a means of achieving what they want out of life.

For them, investment strategies are hardly enough. They want advice on all their complex, interrelated life goals and events, like career and business transitions, special medical needs, philanthropy, major lifestyle changes and family issues around managing wealth. Boomers want insight into all aspects of their situation--personal as well as financial. They want control over decisions without having to do all of the research themselves. They want someone they trust to pull together the necessary resources and expertise and offer them advice based on a deep understanding of their goals, dreams and concerns. 

That's what they want. But it's not what they're getting."
 

and then a much different message from U.S. Wealth Management -

"Subject: Average production per Advisor that far exceeds the industry average

...ATTN: Financial Advisors and Planners!

Sometimes the grass is greener on the other side!


U. S. Wealth Management, LLC is the winning solution
to the following two challenges:


1) You are currently under-whelmed with the results of your financial planning practice and are investigating new firms to help "raise the bar" "...

So now we might expect hordes of salespeople to reprint their business cards to include the term "wealth management". I felt my stomach turn just reading this. They just don't get it, yet we should not be surprised. The economic force to push financial product sales are powerful beyond consumer realization. While there are a growing number of advisers who work in a fiduciary role, this tend to be limited to the very wealthy clients. The vast majority of consumers who need ongoing financial management and advice may never actually meet a adviser who can say unequivocally "It's all about the advice and not about product sales".

keywords: wealth management, financial planning, NASD, fiduciary

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Copyright 2010 by Tony Novak. Originally produced and published for the "AskTony" column syndication prior to 2007. Edited and independently republished by the author in March 2010. All rights reserved.