How To Spot A Greedy Financial Planner & Finding What Fits You
THE BIG THING I WANT YOU TO KNOW:
Not to come off as hardened or jaded, but not everyone’s pulling for your success in this life. You put A LOT of trust into your financial planner, so you should know how they’re being they’re making money off of your money and if there are any carrots being dangled in front of their noses.
Always “follow the money”
The Watergate scandal and “All the President’s Men” taught us to follow the money.
That’s sage wisdom, but I’d like to take it a step further and tell you to “follow the incentives.” What I mean by that is to keep your head on a swivel.
Sadly, not everyone in this world has pure intentions and there’s a lot of BS (pardon my French) in the worlds of sales and finance. I’m here to tell you why if something sounds too good to be true, it usually is.
don’t let anyone sell you steak if you’re a vegan
When I started Dynamic Money, I made the deliberate choice to establish a fee-based financial firm.
Before I struck out on my own, I worked for other financial firms where I learned a lot and I was proud to call those businesses my employer, but I wasn’t in love with HOW I was being incentivized and compensated. Often times, the desires and needs of my clients didn’t match up to products that the firms were trying to push and boost.
It was kind of like working in a restaurant and the back of the house instructs the wait staff to really sell home a certain dish the kitchen has an abundance of. I was like a waiter trying to get a vegan to order a metaphorical 72 oz. rib eye. If you know what I mean…
Anyway, the ruse was so extensive that both the internal AND external marketing materials never let on to the gaping disconnect. The company lines were always some flowery statement like “we put our clients first” or “we treat our clients like family.”
Well, I’m here to pull back the curtain and call shenanigans!
Many firms (and not just calling out the big guys) incentivize employees based on certain products that don’t always makes sense for clients. No, I didn’t commit acts of elaborate espionage— all these guys hide in plain sight! It shouldn’t come as a surprise that Wells Fargo came under fire for opening fake accounts because it incentivized its employees to do so!
It’s not just about beating the market or beating the index or getting a better return, it’s about the incentives that are driving those decisions.
Our way: When You LOSE money, we LOSE money. When You make money, we make money.
With all the closed door deals and shady enterprises out there, I am not shy about how Dynamic Money makes its money.
We charge an upfront fee for financial planning and a fee based on your growth (or lack thereof) for managing investments.
There are no commissions or incentives like cruises or all-expense paid trips to Paris on the back end for any of our employees. We’re in the trenches with you!
But because everyone’s a critic, some people tell me that they don’t like the way we’re paid. In their perfect world, they would like it if we were paid only when their account grows.
It’s an idea that seems great, right? And I get it, no one likes to be kicked when they’re down. But the danger in basing an entire operation that heralds beating the market or beating the index for its clients spawns a bunch of aggressive and risky money managers whose livelihoods DEPEND on beating the market.
(For the record, there’s no shame in working on commission or incentive because everyone has bills, families and lifestyles that require income.)
But let’s say a planner at Money Manager XYZ is managing the account of a couple that’s just two years away from retirement. That money manager is being compensated based on performance relative to the market, so they’re likely going play a lot riskier of a game, again, because their paycheck hinges on it.
How would you feel about someone making all of these risky and aggressive decisions with your money? NOT GREAT! We know that when retirement is within sight, it’s the time to dial down and make conservative decisions.
If our incentive was only to beat the market, you’re going to be as aggressive and risky as possible on your way to beating the market — which can put your dreams at risk!
experience what makes us different
I’ll go toe to toe with any of the big financial planning names on the block and not question our capabilities against theirs, because we’re great at what we do!
Our differentiator is that we don’t promise you a 1 percent higher return than another shop.
In fact, I don’t give a rip about a 1 percent higher return and that’s why we respectfully bow out of the returns game because that’s not our primary concern.
Our primary goal is that we become a trusted partner who sticks with you year over year and helps you reach your dreams for the future.
You don't want the incentives of the people managing your money to not line up with your incentives.
“Incentives are not strategy, they are tactics.”
- Carlos Ghosn