Instant Gratification, Steak Knives and why I’d rather be a sage than a wolf.

I haven’t seen the film “The Wolf of Wall Street”

I haven’t read the book, on which the film is based.

and

I don’t profess to know loads about the author of the book and the main protagonist of the movie, Jordan Belfort.

However there is one thing I do know…

The Wolf of Wall Street isn’t and will never be a role model of mine.

There’s a bunch of reasons why not….

Firstly the way Belfort initially made his money was massively wrong, not only legally but morally.

Secondly the fact that Belfort and his like get shown as a prominent ‘face of finance’ without mentioning the thousands who work with helping their clients with their financial decisions for the right reasons.

and

Thirdly (and I’m not sure if we need another reason apart from the ones we’ve already mentioned) whilst he is no role model of mine he does seem to be aiming to become a role model to some.

You see, although Jordan is the ‘wolf of wall street’ no longer he is now a prominent motivational speaker who reportedly earns tens of thousands of dollars per speech whilst travelling the world.

Now, I’ve got no problems with someone making a decent living.

I’ve also got someone doing this by making a positive change in other peoples lives and I’m a firm believer that someone who’s made some massive ethical and legal, erm, misdemeanors having a second chance (he now talks about ethics and fairness far more than I suspect he did back in his boiler room days)

However whilst Jordan himself might be a changed man, I worry that the people who come to see him want something completely different from his presentation…

They want to know how to change their lives in one particular way very very quickly.

I had an indication of this when I met up with an very old acquaintance recently.

We were talking about what he’d been up to (I hadn’t seen him in a few years) and we first talked about the fact that he went to work in financial services environment abroad for a little while.

I asked him why he’d want to work in a country where financial services was still unregulated and therefore the environment was a little bit ‘wild west’ (and not only due to the fact that both contained a lot of sand!)

His reply was interesting….”When I went for the job, the interviewer told me that I had the potential to pay my mortgage off within a few months!”

I felt a temptation to (but avoided) smashing my head off the table instead masking my frustration with a thin smile.

My acquaintance continued to tell me what he’d been up to…

I asked him what plans he had for the future he told me that since he’d been back from his jaunt abroad he’d been thinking about this but ‘hadn’t got round’ to writing his medium or long term goals or plans either personally or business related.

“Ok” I said “How long have you been back?”

“18 months”

Again, connecting my head with the table seemed even more attractive but I again managed to avoid it however my smile on this occasion was slightly more strained.

We then talked about the fact that he was doing a lot of ‘self development’.

“Ok” I thought “Things are looking up. He obviously wants to look at what he’s doing and how he can improve himself to live a better, more fulfilling, more satisfying, more meaningful and more generous life. I continuously try to do that too!”

However when he started talking about the ‘self development’ he was doing it wasn’t about him.

It wasn’t about how to communicate more clearly, or maintain better relationships, or to be happy, or to run better businesses.

It was all about how he could ‘sell more stuff’ and this included listening to the likes of Jordan Belfort (who talks about ‘straight line persuasion’ techniques – whatever that means!)

Now, whilst making more money and learning how to communicate and persuade more effectively (in my opinion) aren’t bad aspirations to have, the issue I had with all my acquaintances actions from his move to work in financial services in foreign lands, to his lack of plan, to the time and money he’d spent trying not to develop as a human but just as a more effective ‘seller of stuff’ was they were all about one thing…

Instant Gratification.

Interestingly the financial planning and advisory profession has changed massively and is continuing to change.

However when I first came into our profession one of the first things I was told in a new job (many years ago for a large financial institution) was that “you’re only as good as your last months production”.

Interestingly all the actions they took as a business looked towards encouraging actions which only focused on the delivery of ‘numbers’. From the “Glengarry Glen Ross” style ‘sale board’  and incentives (although I never won a Cadillac Eldorado or a set of steak knives!) to how we were all remunerated to who got spoken about in the highest regard.

However looking back I realise two things.

At that stage many financial planning and advisory firms work in this way (I’m not sure how many still do!) and a lot of the measures in place were about attaining relatively instant gratification i.e. trying to make as much money as quickly as possible without any measured regard for much else.

Now, and with me being the ultimate judge, I don’t base how good we’re doing solely (or even majorly) on income production levels.

I base it on a bunch of different factors including whether how we improve our systems and processes. Whether we’re making a positive change to our clients (and for the teams within our business) lives, or whether we’re open to new ideas which not only make sense commercially but also provide us with potentially more time to do stuff we love.

Therefore whilst measuring both recurring and new business fee income month by month is important we try to measure our success by other means too.

I might be wrong however I reckon that trying to build a long term reputation, making strategic instead of knee jerk decisions and building legacy are way more important than another few quid in the bank.

and

I thought that much of our profession thought in the same way. 

However every now and again I get the impression that there might be (quite a few) people who still work as financial advisers and planners as ‘policy floggers’ with their vision stretching only as far as the end of their nose.

In contrast I believe that to build a true profession we can be massively proud of we all collectively need to understand that the service we deliver isn’t about positive change for us (it’s about positive change for our clients), it isn’t a ‘quick win’ business (but a business where we deliver a service designed to help people over many years) and it’s a business where move of us need to have the longer term vision of some like Warren Buffet (and ignore the short term approach of someone like Jordan Belfort).

After all….

I’d rather be like the “Sage of Omaha” than the “Wolf of Wall street” 

So, these are my thoughts on this subject however I’m interested in yours…

Has financial services in the UK transitioned fully from a product based model to a consultancy based ongoing service model?

If not, how much of the advisory population still continue to work in the traditional way?

Do you think the way many financial planners and advisers worked in the 70’s, 80’s and 90’s meant that we now have a legacy of mistrust of many financial professionals in the 21st century?

and

Do you actually think I’m wrong. Is the sales based transaction led approach a better way to work with clients than the service lead approach we now take? If so, why?

As ever I look forward to hearing your thoughts.

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3 thoughts on “Instant Gratification, Steak Knives and why I’d rather be a sage than a wolf.

  • Hi Chris,

    I think it is important to remember that the change in our industry has not been brought about by the adviser community.
    The financial services industry was created by providers to distribute products which they did for many years through their own sales forces.
    When I joined the industry there was never any alternative to the commission system whether as a direct employee or as a what was then called a broker.
    The need for profitability in the face of changes imposed by Government brought about the demise of employed distribution and the birth of what became IFA’s.
    Nothing righteous or morally superior about that process just economics.
    The industry now thinks of itself as being investment advisers but this has only come about as providers gradually focussed their commission systems away from unprofitable regular premium or protection products onto the lump sum business they wanted for their own purposes.
    There have been many changes in our industry but throughout the providers have retained control either through remuneration or through the consequences of the Law of Agency under which the industry operates.
    We still have the odious product based compliance regime despite the movement towards service and we still as advisers retain liability for products over which we have absolutely no influence.
    To get back to your point yes there were bad apples but there were many more good ones doing a fine job within the only market which existed in financial services.
    Of course we saw some advisers trying to mislead their clients through commission offset systems which had no basis without sales commissions to support them.
    We are heading in the right direction Chris but there is an awful long way to go and I think the adoption of the slightly aren’t we superior attitude is not only unfounded but extremely premature.

    Reply
    • Hi Phil,

      As ever an interesting and thoughtful response…

      Firstly, and having reread the piece I reckon you’re right about the tone.

      It was my intention to highlight the fact the difference between the different attitudes you can have to running a financial planning business but parts did come across as a “aren’t we superior!” and wasn’t intended to be!

      I’ll openly admit to anyone that I’ve got a lot to learn (haven’t we all!), a lot of work to do to improve and refine my business and am open to different opinions.

      It’s part of the reasons I share ideas on a forum like this where constructive debate is part of what makes Adviser Lounge good!

      So apologies if it came across that way. I assure you it wasn’t the intention.

      I also agree that the legacy of the financial services industry was built around distribution of product.

      However when does the point come where we look in the mirror and say, I’ll let product manufacturers do what they want (and my clients will probably have a need for them at some stage) but I won’t let them dictate or define my business model anymore?

      The comments about regulation are interesting however I’ve found many of the FCA’s recent comments, as well as some of the interactions we’ve had with The Pensions Regulator recently to be indicative of regulatory bodies (and perhaps for one of the first time’s in this profession) happy to listen and explore more efficient methods of regulating the market.

      Thanks again for your comment!

      Reply
  • Hi Chris,

    This site is provider funded as is the entire industry media – printed and digital output.

    Much of the adviser income is still in the form of provider administered payments – whatever you call them.

    People are lobbying for long stops and castigating the regulator for working to the Law of Agency a situation which must have the providers laughing in the background..

    There is and in fact never has been any real attempt to separate the adviser from the provider. You will have seen no help in our media for advisers trying to come to terms with expressing value to enable a transition from commission to being paid by their client.lots of stuff about the admin side of a business but nothing about the client aspect.

    WE made the decision to break free back in 2003 and I thought we would be quickly followed by many but here we are over ten years on and the majority are still joined at the hip to the providers for one reason or another.

    What is sad is how few have taken the trouble to find out and understand the laws under which we work which have been used to control distribution -us – for decades.

    Sorry to rabbit on but I do think it is an important subject.l

    Reply

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