The Financial Advisor Trust (FAT) Problem — An Opportunity in Disguise.
By: Derek Notman
Tags: Financial Advice, Financial Planning, Lead Generation, Financial Advisor, Trust

Do you have a FAT problem?

I would argue that all financial advisors suffer from the FAT problem.

One can speculate why most people don’t trust the financial advice industry.

But the data clearly shows it is an issue, just look at any one of these studies:

Reasons we have a FAT problem

We can come up with our own ideas on why this is, things like:

It could be because of crooks like Bernie Madoff who literally Made Off with tens of millions of client’s money.

It could be that there is an overarching lack of transparency in our industry when it comes to disclosing fees, commissions, and that most advisors simply don’t list their prices or bury them so deep in the ADV that they can’t be found.

It could be that so many so-called advisors are just product pushers who go for the quick buck and continue on this churn and burn treadmill leaving a wake of upset clients.

The list goes on, but we don’t need to focus on the negative anymore. It’s clear there is a problem and whether we are one of the advisors who is perpetuating the problem or not we are all effected by it.

How to solve the FAT problem

I love solving problems!

If we cut the FAT we find massive opportunity.

There are loads of awesome advisors out there but unfortunately the shadow of FAT has overshadowed them for the most part.

First, we must focus on What is needed to solve the trust issue.

Trust is formed when we share strong commonalities with people. Trust is a byproduct of shared experiences, philosophies, ideals, etc. Trust is something earned when we see the other person “gets us” and is genuine.

If these things are lacking then trust doesn’t happen.

If trust doesn’t happen then business is a struggle at best.

So How do we cut the FAT and show people they can trust us?

Well I have some thoughts on it, specifically it is my belief that if we focus on the following changes and activities that we can all collectively cut the FAT that will drastically increase the amount of trust and therefore business we can all gain.

Full transparency: Advisors, life insurance agents, RR’s, IARs, etc. should be much more clear and forward with Who they are, What they do, and What the prices/fees are for their services. We don’t go to Best Buy to purchase a new TV without knowing all the features of the TV and what it costs.

Products as a byproduct of Planning: Nothing wrong with most financial products but they should be a byproduct of strong planning and advice. Product XYZ, believe it or not, is not the best solution for ALL of your clients since sliced bread.

Build a robust digital footprint: People are online searching for virtually everything (over 3.5 billion searches a day on Google alone). If we are not online (social media, websites, etc.) then how can people find the information they are looking for from us? If we don’t have a strong digital presence then that is a major red flag when a client is looking for what we do. People want what we have to offer, they are searching for it, but if they can’t “research the TV before buying it at Best Buy” then they will never become a customer.

Here is an example of a new client I am working with. They came to me because I do the things above. They are in a different time zone. We will probably never meet in person yet we were able to build a strong relationship and trust each other.

What would it mean to you if you had clients coming to you like this?

People want our help

The work we do is of immense value and certainly needed by the majority of people but if there is too much of a FAT problem people will opt to not work with an advisor over working with one and having an awful experience, and who can blame them!?

What you can do to help cut the FAT

Invest the time to:

Get educated (go get your CFP, etc.) so you can educate and empower your clients to make great financial decisions — Yes this will take time but there is no reason you can’t act with the same values, processes, etc. that someone with a CFP would use.

Build out your digital footprint and then create awesome content for people to consume. This is how you nurture relationships and trust with potential clients

Embrace tech to do these things faster, better, and at scale

Massive problems can be massive opportunities

We know there is a lack of trust for who we are and what we do.

We know there are some specific ways to fix it.

If the majority of us invest the time to cut the FAT then we in turn bring an entire industry forward and improve it’s impression on the masses.

We all win this way. Those that do not cut the FAT will now be the minority and much more easily pointed out.

I realize solving the “trust” issue is a big task that will take time and that it will never fully be solved but if we all do our small part then over time we find ourselves in a situation where more good is happening and the impression of our industry has also improved.

Looking at this another way, what do we have to lose by making the changes I reference above?

What suggestions do you have to help bring our industry into a more favorable light for the consumer?

Best Regards,

Derek

PS I am working on something that will be a major step in the right direction in solving the trust issue, stay tuned…..