Be Ready for the Questions Your Clients Will Be Asking


Be Ready for the Questions Your Clients Will Be Asking

As I was traveling around the country attending conferences, The New York Times published an article that caught the attention of many people in our industry. “The 21 Questions You’re Going To Need To Ask About Investment Fees,” points out questions we all need to get comfortable answering.* Better yet, we should prepare to discuss them upfront with our clients  

 

The article is a perfect example of the market effects taking place in the financial services industry. While the U.S. Department of Labor Fiduciary Rule has been delayed, our industry has already started a transition that is unlikely to be reversed. Our clients have been exposed to many of the perceived conflicts that exist in our business, and they have the right to ask appropriate questions. 

 

At the same time, I believe it is entirely appropriate to continue selling commission-based products, especially in long-term income planning and tax-deferral situations. Simple math indicates that commission-based products, when used properly, enhance the client position in many cases (as with any product solution).

 

The article asks questions about compensation, incentives, trips and fees. All of these are important to disclose to our clients in the future. If incentives are involved, I would argue we need to be upfront about those in the new fiduciary world. In fact, we need to figure a way to not be incentivized by these and focus on vendors making our business more efficient and effective. In the end, we must be prepared to answer all our clients’ questions about our compensation, the fees of the product, and why the particular product is the proper solution.  

 

As an industry, we need to take this type of article to heart. The news media should not be educating our clients about fiduciary status. Instead, we need to show them how valuable financial service professionals can be in building a long-term retirement and wealth management plan. If we commit to that, everyone wins.  

 

Winning Strategy:

Whom do you want educating your clients – you and your staff or the news media? Stay ahead of any hype. Be ready to answer questions about fees and compensation. 

 

About the Author

Mike McGlothlin is a tireless advocate for the retirement planning industry. As executive vice president of annuities at Ash Brokerage, he heads a team providing income planning solutions focused on longevity and efficiency. He’s also a thought leader who provides guidance and assistance for advisors and broker-dealers navigating marketplace and regulatory changes. You can find a collection of his blog posts in his book, “Above the Clouds … Winning Strategies from 30,000 Feet.”

*New York Times, “The 21 Questions You’re Going to Need to Ask About Investment Fees,” Feb. 10, 2017: https://www.nytimes.com/2017/02/10/your-money/the-21-questions-youre-going-to-need-to-ask-about-investment-fees.html?_r=0