Just a Salesperson
Fee-only or commissioned based - we should all have the right to present our products and services. And we should all act in our clients' best interest - without labels and without negative implications based on titles that often get politicized.
Just a Salesperson By Brian Ashe
No matter your title, what matters is if you are compensated in a way that gives clients neutral information on which they can make a values-based choice.
Are you a fiduciary or "just a salesperson?" Thats a question most financial professionals get asked today. And the question does not just seek an answer to clarify status. It most often carries the implication that if you are "just a salesperson," you are less professional and less educated, conflicted in your advice and motivated by acting in your own self-interest to the exclusion of the clientâs best interest.
On the other hand, if you are a fiduciary, the implication goes, you always act only in the best interest of the client, you have more and better professional designations, and you have a purity of intent legislatively conferred upon you by the simple reference to your "fiduciary" status.
Doing whats best for the client
As usual, the truth lies somewhere in the middle. Many good colleagues are fee-only fiduciaries who strive to do the best for their clients. The best do so because it is the right thing to doânot just because they are legislated to do so. The bad, like Bernie Madoff, a fiduciary who perpetrated the largest financial fraud in U.S. history, use the "cover" of the fiduciary designation to mask their real statusâcommon criminal. When it comes to actual performance for the client, the legislated designation means very little.
The same holds true for commissioned salespersons. Many commissioned salespersons strive to do the best for their clients because it is the right thing to do. Some are the most educated and innovative professionals I have ever known. And evidence that these salespersons do the right thing is most often manifested by the fact that they develop successful, relationship-based, trust-filled practices populated by many bright clients who certainly can discern when they are being taken advantage of by a huckster. And truly, the life insurance business, too, has had its own instances of salespeople who defrauded their clients, and even their own companies, for the same reason Bernie Madoff didâthey are common criminals.
Many commissioned salespersons strive to do the best for their clients because it is the right thing to do.
So, if we all agree that there are good and bad professionals in the fee-only fiduciary camp and the commission-based sales camp, what may be the most important factor the client needs in order to feel comfortable with the professional he or she is working with? I would like to think the great objective leveler would be "disclosure," transparency in how we are compensated in a manner that gives the client neutral information on which he or she can make a values-based choice.
Because most important of all in a free society is the right to make a choice. And, if a government agency, without any creditable empirical data, forces consumers into only one way of completing their financial transactions, weâconsumers and financial professionalsâlose our freedom.
Right now financial "salespersons" seem to be uniquely in the rifle sights of regulators. Yet, when it comes to the life insurance professional, I must sincerely ask "why" and "why now?" Life insurance companies have essentially been around since 1759 when the Presbyterian Ministers Fund had its beginningâabout 250 years longer than "robo" advisors! And U.S. life insurance companies, according to 2015 statistics:
- pay out $1.7 billion per day in benefits to families and businesses
- provide protection for 75 million families
- purchase more than 20% of all corporate bonds
- hold 16 % of the nationâs savings in insurance and annuities
- Manage funds for 20% of all defined contribution plans and 14% of IRAâs
- have $5.9 trillion invested in the U. S. economy
- provide 2,500,000 jobs
And almost all of the initial funding making those results and benefits possible was generated by "just a salesperson," entrepreneurial men and women, calling on one client at a time, often working for no compensation and no fee, and just hoping that if they did a good job, represented a good company with good products, continually educated themselves, provided good service and built relationships, they would do well for themselves financially by doing good for others.
Fee-only or commissioned basedâwe should all have the right to present our products and services. And we should all act in our clientsâ best interestâwithout labels and without negative implications based on titles that often get politicized. On August 1, 2017, I started my 49th year being "just a salesperson." Iâd like to think my clients feel I am much more.
Brian Ashe, CLU, is president of Brian Ashe and Associates, Ltd., in Lisle, Ill., and the 2012 recipient of the John Newton Russell Memorial Award. A past president of MDRT and a past chair of LIFE, he may be contacted at firstname.lastname@example.org.
This article appeared in Advisor Today.