So I was reading some of the endless spin put out by the financial services industry, in this case a NY Times article that I encountered three months ago, and then saw reposted by Yahoo Finance’s Advisor’s Corner on January 5, 2011 called “3 Schools of Thought on Wealth Management“. The financial services industry is scrambling for a new way to package their message to get a hold of your money, but the last thing you need right now is a new sales pitch. What you need is performance and results. The article breaks down the new approach to client management. It says, “In this climate, advisers face a challenge, and, once again, they have had to develop new ways of presenting their services. Speaking broadly, three approaches seem to have emerged”.
And what are those three approaches by which the industry seeks to re-invent itself, in response to its failure?
- The “Caring Approach” (meaning to hold the client’s hand)
- The “Technical Approach” ( meaning unclear, but perhaps to allocate well and charge smaller fees)
- The “Retirement Focused” approach (meaning to fall back on the standard advice of always invest for the long run with its implied promise that it will all work out in the end, because of course this fairy tale must have a happy ending)
It’s a long article that drones on and on, but fails to address what matters most – performance and results! Yet this is the primary reason people hire a financial pro – to grow their money better than they can grow it themselves.
Sadly, the industry track record on their ability to grow their client’s money is incredibly clear at this point. They do not know how to do it, and based on this article and many more like it, they sure don’t want to talk about their track record. After all, why should they? The financial services industry is setup to insure that they always make money, whether or not their clients do. So, now they are focusing on reinventing their approach, without actually changing their performance and so long as they can continue to pull that off, they won’t need to.
While performance in not relevant to the industry, it sure is to the people who have trusted the industry with their hard-earned dollars. In 2000-2001, and again in 2008 when the stock market was terribly overpriced, most of the so-called financial experts continued to repeat their standard advice: “Keep on investing. Invest for the long run”. They urged their clients to keep buying those crazily overpriced stocks.
Well, the game is beginning to change. The industry’s failure to perform has cost Americans a fortune and now people are beginning to look at the practices of the financial services industry with a critical eye. Check out the comments posted below the article I described. There were lots of them and they were scathing. People are starting to see the truth and demand better and that’s exactly what Money Smart was created for: To share a better approach to personal finance and investing, an approach that has been proven to work.