When Your Motivation Is Questioned
The problem for every salesman is convincing the consumer that the product you are selling is the proper item to be purchased, and not just the best item for the salesman to sell.
Almost every salesman has had his motivation questioned at some point, and that is obviously true among financial advisors. Because investors question whether an advisor has the best interests of the client in mind, many investors choose not to be clients at all.
Spectrem’s study Evolving Investor Attitudes and Behaviors asked investors to explain how they feel regarding the motivations of financial advisors, and found that many investors are uncertain advisors have anything but their own bottom line in mind when they suggest products or services.
Forty percent of all investors believe financial advisors are more concerned with selling their products than with providing proper investment guidance to their clients. That may explain why 43 percent of all investors do not have a primary financial advisor. It is also why the federal government has spent so much time trying to create a best interests standard for advisors to follow.
The Spectrem survey respondents are segmented by several demographic characteristics, and among them is advisor dependency. Among those investors who consider themselves Self-Directed investors who make almost all investing decisions without benefit of an advisor, 67 percent believe advisors make recommendations with their own self-interest in mind rather than the needs of the client. Among those investors who are Advisor-Dependent, allowing their advisor to make all the investment decisions, that percentage drops to 10 percent.
Do you want to know what other types of investors believe advisors are improperly motivated? Those investors who are very knowledgeable about investing themselves. Fifty-five percent of investors who claim to be very knowledgeable about investing and finance believe advisors are more interested in selling product than providing proper guidance to their clients.
Keywords: investors, advisors, Spectrem, attitudes, behaviors, motivation, self-interest