Ebenenzer Scrooge, the cold-hearted miser of the Charles Dickens novella, “A Christmas Carol”, is making his way through the halls of investment firms everywhere, with his signature phrase “Bah! Humbug!” ringing out.
As the famous story plays out, Scrooge is visited by his former partner, Jacob Marley’s, ghost, and the three spirits representing various stages of his life. Each of these three spirits can represent the conflicting and constraining aspects of financial advisors’ compensation under several models in the industry, and the potential that exists within the opportunities of change.
Many advisors began in this industry with a goal of helping others achieve their financial goals. And to that end, this remains a steadfast goal of many advisors, regardless of the structure in which they operate. But just as Scrooge evaluated the vision of the Ghost of Christmas Past, advisors can be met with nostalgia and regret as well when contemplating their career. Many began their careers with a firm that “took a chance” on them, and they worked diligently to build their book of business and client base from persistence and an unrelenting desire to succeed. The regret on the other hand, may exist in many forms, such as the bias to offer proprietary products of the firm, or the limited payout based on confusing and ever-changing compensation payouts. Sometimes there are bonuses based on ancillary products that may not be in the best interest of the client. The desire to be a fiduciary and be free of over-bearing compliance presents another regret that diminishes that nostalgia found looking back on the early days of their careers.
The Ghost of Christmas Present enters the Scrooge vision next. In this parallel, advisors are now presented with an ever-increasing production level that moves higher and higher and cuts payouts to fractions of what is reasonable and deserved. In addition, minimum account sizes are being implemented that may limit or even eliminate advisor compensation from accounts of valued friends, family members, and young professionals accounts who grow into considerable wealth later. The advisor began in this business to help people but now is being told to not help or if compelled to do so, payment may not be permitted for services. Financial advisors find themselves feeling like Bob Cratchit, working for Mr. Scrooge while simultaneously trying to help others.
Last, the third “Ghost of Christmas Yet to Come”, visits Mr. Scrooge. In this vision, Mr. Scrooge begs the spirit that he will change his ways and wakes up in bed overjoyed at the opportunity to do so. I am not sure that the structure described previously is going to change anytime soon for those advisors. But you as the advisor, have an opportunity to change it.
That same drive and vision you had when starting in this business can be executed today in the independent model. You can be released of the arbitrary compensation restrictions, account minimums, and non-sensical production changes. Offering ALL clients an experience aligned with their need is within an independent model. You can guide clients towards their financial goals under a fiduciary framework without potential bias. In addition, the support and framework that allows you to focus on the client, building relationships and sales, and off-loading the back-office and mid-office work holding you back, is available within the Fragasso Independent Advisor Solutions model.
Just as Ebenezer Scrooge found the light, make 2022 the year you break the cycle with the support of Fragasso Independent Advisor Solutions.
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Starting Your Own RIA
