Not quite sure why, but yesterday I had a very vivid memory of a specific experience I had at Merrill Lynch.

See if it makes as big an impact on you as it does on me (years later).

I had been a broker with Merrill Lynch for 8 or 9 years, so this would be approximately 2001-2002 when this happened.  And during my 8-9 years, I’d been fortunate to develop some business relationships with some wealthy clients.  As a result, I was invited to participate in Merrill Lynch’s “high net worth” training program in Princeton, NJ.

This program, as I recall, was primarily about technical training and discussions of subject matter that were applicable to those with a net worth of $5 million or more.  We covered things like hedging strategies for concentrated stock positions, exchange funds, private equity, hedge funds, institutional separate account management, estate planning, asset protection and a ton of other topics.  It was a pretty intensive program. Read More »

“The financial services industry — including banks, brokerages, and insurance companies — is unique among all others. Through effective advertising and marketing, it’s been able to evade being painted with the brush other underperforming industries have, and in most cases, their well-designed sales pitch has allowed them to effectively prey on the emotional desires of investors”

The above quote is from the back cover of Dave Loeper’s book Stop The Investing Rip-Off.

I think it sums things up pretty well.  What do you think?

I’m a professional advisor.

I have strong opinions.

I love what I do.

But it wasn’t always this way …

I used to be in product sales.

It’s August, 1993, and I’ve just been hired as a “financial consultant” with Merrill Lynch in Atlanta, GA.  My first 3 months at Merrill Lynch were focused on 2 things:

• Studying to pass the necessary Securities licensing exams, and

• Sales training.

A quick note: the “necessary Securities licensing exams” I reference above are licenses to SELL investment products.  If I didn’t pass the exams, I couldn’t SELL financial products to people.

I passed the exams, got my insurance licenses and was ready to go. But that’s not what I want to talk about.

What I want to talk about is the sales training I received.

While I can’t speak from experience in other sales jobs, my guess is that I was trained in many of the classical sales strategies that have been passed down over the years.  I would record cold calls I made to people and would review what I did right (or more often, what I did wrong) with my Sales Manager.

I was schooled on how to overcome objections. “Oh, you’re not interested in the stock of company XYZ Mrs. Smith, well how about a tax-free bond? Oh, you already have all the tax-free bonds you need, well then how about something else?”

I was instructed to always give ‘em a firm handshake and say their name a lot when talking with them. Apparently, there was a psychological study somewhere that said people like to hear their name spoken by others. Yes, that’s right … I was told to play mind games with people.

If you’re not yet getting the picture, my job was to sell stuff.  In fact, my training revolved around selling stuff to people whether they wanted or needed it.

Now, certainly much has changed since 1993.  The financial advice industry has embraced “financial planning” and a more “consultative sales process”.  But when you peel back the onion, Wall Street is still fueled by the ability to sell stuff to people and they have HUGE marketing budgets and highly produced TV ads to convince you that you need what they’re selling.  I think there are some big problems with this approach, and whether or not you agree, I finally had enough of it.

It’s March, 2006, and I’ve just resigned from Merrill Lynch to start my own independent, fee-only, fiduciary, FINANCIAL ADVICE firm, Thornton Wealth Management.  Sure, there were plenty of opportunities for me to have become an independent FINANCIAL SALES firm, but that’s what I was wanting to leave behind at Merrill Lynch.

Today, I’m fortunate to do good work for nice people and make a positive impact in their lives.  I’m still a sales person — I want to be absolutely clear about that.  But I’m no longer in product sales.

These days, I sell my ongoing advice delivered via a long-term relationship. And I love what I do.

But many of you may have a difficult time deciphering who’s who in the crowded marketplace of those willing (and wanting) to be your financial advisor.

So here’s a simple test for you to use:

As you meet with and interview financial advisors, ask them if you can work with them and pay their fee, but not transfer your investment account(s) to them.  In other words, determine if their ability to work with you is dependent on your ability and willingness to turn over your investment accounts to them.

When I worked at Merrill Lynch, this was how it worked and this is still the case today. I couldn’t get paid unless you moved your accounts to Merrill Lynch so I could collect commissions and fees from your accounts.

Contrast this with many independent, fee-only, non-product-selling, fiduciary advisors (including yours truly): most are happy and willing to work with you whether or not you have investment assets to manage.  They’re selling advice — not products.

This, my friends, is the difference between being sold financial products and being sold financial advice.

I think the latter is better option for all involved, and I hope you do too.