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Posts tagged ‘Financial commentary’

What is ‘Independent Advice’?

An article in the current edition of The Insurance & Investment Journal raises the age-old conundrum of receiving ‘independent advice’. It should be noted that the report is in support of the idea.

Why has this been such a prevailing issue, frequently a hot topic of reportage?

I certainly identify with the question of how independent is the advice one gives. In my twenty-four years in the financial services industry, I was working on behalf of a large organization primarily focused on planning and investments. With respect to the latter, we were offered a platform of in-house investment options, chiefly mutual funds; although for about the last twenty years, third party managed funds have been offered as well.

Thus, while not exactly offering completely independent choices to clients, we were able to cover the range in a reasonable manner, made more so by the company’s emphasis on overall financial planning, and its training sessions for the ongoing development of consultants. Moreover, in this industry, the array of offerings across the board for many years has been so vast, no one could be an expert beyond a limited range of products anyway.

In the article, a different aspect of the issue is discussed, namely, the law of survival perspective affecting insurance companies in Canada. The narrative looks at how best practices ties into what’s best for their distribution networks.

On the one hand, there are independent advisors who want to remain so. “If an insurer offers special conditions to independent advisors to increase sales” – inducing them to funnel their business to only one provider – the impact may “become unfair to other advisors with whom it has business relationships”.

On the other hand, if the insurance company increasingly focuses on its own network of distribution, “it is likely that other insurers will eventually do the same”. If they all start to fold their tents, the wide-open possibilities of interdependence will be replaced by the tunnel vision of intra-dependence.

In other words, it is not only unseemly but also impractical for supposedly independent advice to be allocated from just one hand.

So, can advice in the context of providing a service ever be truly independent?

As suggested by my own experience, and with other service episodes anecdotally, this goal remains aspirational. When I hear or read of spokespeople promoting the independence of their service mantra, I can’t help but feel they are deluding themselves.

No one person or organization has an all-encompassing formula or lock on full independence, at least not in the commercial world. Product knowledge in many service fields, such as relating to personal finances, keeps advancing and expanding. As we all know, technology has quickened the pace; indeed, as pointed out by Tom Friedman in his book, “Thank You for Being Late”, the pace of ‘accelerations’ has reduced internal evolution in much of what affects us to one to two years. As well we must consider the human factors, such as personal expertise, performance, and, let’s face it, ethics.

Thus, truly independent advice giving is a ‘pie in the sky’ concept. That doesn’t mean we can’t enjoy reaching for a piece as much as possible.

 

Adding Value

The proposition of ‘adding value’ has been an underlying foundation for success in service-oriented businesses for many years.

If one wants to generate a positive, lasting and loyal, relationship with customers, providing those extra ingredients of value is vital. This could be indirectly related to business, i.e. taking clients to lunch, paying for tickets to events, etc., or more directly, such as keeping in regular contact, or going the extra mile in solving problems quickly, or obtaining more helpful data for decision making. (more…)

Charitable Rewards

According to a recent report from the Fraser Institute, using tax data, the percentage of Canadians giving to charities has diminished to about 21% from a level of 25% ten years earlier. It has also gone down as a percentage of income.

Americans compare more favourably on this particular scale, with nearly 25% contributing and at a much higher rate of income than Canadians. (more…)

What’s in Those Titles?

An article in the April issue of The Insurance & Investment Journal tackles the issue of forthcoming restrictions on the use of financial planning titles in Ontario.

Some forks in the road needing consolidation are at the heart of this thorny issue. (more…)

Being Advised

As we come toward the end of another calendar year, many Canadians will try to wade through a range of activities and other personal commitments.

Among issues historically many of us take stock of is our financial situation. It may involve looking to trigger capital losses to offset taxable income (gains), maximizing annual RESP or RRSP contributions (the latter with its 60 days’ grace period into the next year), and bigger picture issues such as how our investments portfolio has performed over the year, or even how effective our relationship is with our financial institution(s). (more…)

A Grade of B

Did you know there are eight versions of Vitamin B?

A mouth-opening article in the current issue of Psychology Today reveals the connection of these vitamins to the health of our brain. They all “influence brain function because they each contribute to energy operations in the brain”. (more…)

Whoa! The Orphan Client

When I was in the financial services industry, one of the client servicing issues I dealt with, on the insurance side, concerned what have been termed ‘orphan clients’.

Such clients came about from departed representatives, tending to fall into a category of not high priority allocation, or at least not priority follow-up. They might be awaiting a trigger for administrative staff to arrange a replacement agent. (These times were on the cusp of tighter compliance expectations.) (more…)