Cheetham Jackson - Smart Investment

CHEETHAM JACKSON 3 of investors leave their Financial Advisors because of poor service. 87 % A survey by Russ Alan Prince and Brett Van Bortel, ‘The Millionaire’s Adviser’ (2003) shows that of those investors who leave their financial adviser, only 13% do so because of poor performance, but a staggering 87% leave because of poor service.Why is this? • The traditional, commission-based model relies on the payment of commission to financial advisers by insurance companies and fund managers as a reward for promoting and selling their products. • Financial advisers are paid by the product providers, and not by the clients they serve. As a result, poor service is endemic, and, though often promised, is rarely delivered at an appropriate level. • This results in disillusion, disappointment, then the departure of clients who are not getting the ongoing service they need and deserve, and in desperation, they seek out other financial advisers, most of whom also work on a commission basis, who are then almost forced to recommend encashment of existing investments and reinvestment of the proceeds in new investments, with more new commission being charged, in order to generate the income they need to stay in business.This ‘churning’ of investments results in high costs, high commissions, and ultimately, it is the client who pays. The present system rewards financial advisers for making sales to investors, not for providing them with service. There are, of course, some existing advisers who do not regularly recommend changing investments in order to generate new commissions, and others work on a fee basis, taking no commissions at all.The problem for investors is finding an adviser who will put their interests first and foremost, and who are paid by the client, and not by others who have vested interests in generating sales. Poor Service Investors have been poorly served; they deserve more. Question:Why do clients leave their financial adviser?