Building a Standard for Financial Advice

There was a good article in Research magazine last month about the business of financial advice and how it needs improvement.  Research is an industry publication so it’s not the sort of article which would be distributed to the general public.  That said, I’ve read articles in consumer publications which comment on many of the same points.  Part of the problem is that the financial advice industry doesn’t really have an official designation, perhaps one that is state-issued, required for  inclusion in the industry, and that has a rigorous set of practice standards.  Accountants have the CPA, financial analysts have the CFA, lawyers have the JD, etc.  Some might say that people in the business of giving financial advice have the CFP (Certified Financial Planner) designation, which they do, but that isn’t a requirement for inclusion in the industry.   In fact, many people don’t know about or distinguish between the various financial planning designations which exist.

The qualifications of your financial advisor may not be quite as important as the qualifications of your doctor or surgeon, but believe me, people don’t like losing money or locking themselves into inferior products as the result of bad advice, especially when that advice is given with a profit motive.  The Research article highlights the fact that many financial advisors give radically different advice when it comes to talking points within the same subject.  While that fact might ordinarily seem very scary, it is true that financial advice is very personal and two people might need totally different advice depending on their situations.  That said, I think part of the underlying concern is that advisors get too comfortable with certain products and strategies and rather than tailoring advice to their clients, they tailor their clients to their advice, pushing the same products and strategies over and over.

It makes sense – there are too many areas of financial advice to become an expert in all of them.  On a daily basis our profession deals with investing, insurance (life, long-term care, disability, health, etc) estate planning, tax planning, and many other topics.  Any one of these areas could be an exclusive specialty and full-time career.

As an industry, it would be helpful to have some sort of uniform practice standards when it comes to advice about various financial planning topics.  It’s fine to customize advice around specific client needs, but there could be standard advice when it comes to certain topics such as: active vs. passive management, retirement income solutions, portfolio withdrawal rates for retirees, etc.   I also thinking adapting the fiduciary standard over the suitability standard would go a long way towards building consumer trust around our industry.  If you aren’t sure what I’m talking about with that, you can read more about it on my blog.

So what should you do as a consumer?  Well, you can get yourself moving in the right direction by choosing a firm which operates on a fee basis (either fee only or fee-based).  This should better align your interests with your advisors and rid yourself of the product bias involved with commissions paid on the sale of financial products.  Further, you can seek out Investment Advisors who are held to the higher fiduciary standard when it comes to giving advice.  My firm, Premier Wealth Advisors, is a Registered Investment Advisor (RIA), so we are held to the fiduciary standard of doing what is in our client’s best interests rather than what is simply “suitable.”

Once you get in touch with a financial firm, don’t be shy about asking important questions.  Some of those questions should include: their experience, qualifications, services, approach to planning, fees, disciplinary actions (if any) etc.

As always, feel free to contact me with any questions or concern.

Russell Bailyn


Wealth Manager
Premier Wealth Advisors, LLC
14 E 60th Street, #402
New York, NY 10022
P: 212-752-4343 *231
F: 212-752-7673
rbailyn@pfawealth.com

Securities offered through: First Allied Securities, Inc., a registered Broker/Dealer. Member: FINRA/SIPC. Financial Planning offered through First Allied Advisory Services & Premier Wealth Advisors, Inc. Premier Wealth Advisors, Inc is a Registered Investment Advisor. First Allied Securities & Premier Wealth Advisors, Inc. are not affiliated entities.

2 thoughts on “Building a Standard for Financial Advice”

  1. Pingback: Building a Standard for Financial Advice | Dring Drong
  2. Financial advice is really important to people. Specially for the newbies. Thanks for delivering such a good article. I am also in this field, giving advice.

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