I received an interesting call; or should I say my husband, Tony, did. Though I introduced myself as Tony’s business partner, there was much reluctance to speak with me. I guess this gentleman thought I was a ‘gal Friday.’
Finally, he decided to take up his solicitation with me, though it wouldn’t have mattered to whom he spoke with – the answer would have been the same.
He tried to sell me on the idea that we should reward our top clients with a trip to some elite golf tournament. Never mind that the only person less interested in golf than me would be Tony – or me, were I buried six-feet under.
He argued that this would help us show our appreciation and allow us to hobnob with other prestigious and wealthy potential clients. When I explained that we don’t operate that way he asked how we reward our top clients and how we attract prospects.
“By doing a damn good job,” I said. I went off on a tear.
“By always putting their needs first. By offering comprehensive financial planning that includes advice on all that really matters to them — estate planning, taxes, insurance, charitable giving, college savings, and retirement planning. By educating them through our blogs. By investing in low-cost, diverse options. By being transparent in our fees. By not charging them extra so that we can throw in ‘free’ perks that they actually pay for – like a golf tournament.” I caught my breath, “And, they like us so much, they refer us.”
He was sorry he asked.
This reminded me of my early years at Dean Witter Reynolds (“DWR”) working in the Incentive Services department. Being 23 and single, the firm probably thought they were doing me a favor, giving me exposure to wealthy, powerful men. Judging by the gender and age of my counterparts, I would say we (unknowingly) fit some sort of “Stepford” profile.
The department’s sole purpose was to reward top producers with trinkets, trips and all the perks of being alpha-dog salesmen. Items bearing the company logo, such as golf umbrellas, Gore-Tex® rain gear, and Titleist® golf balls were handed out like Santa filling stockings of all the good little boys (that’s right, not a drop of estrogen to be found).
Our job was to make sure these producers felt pampered and worshiped. Trips were to exclusive locations, like Monte Carlo. All the arrangements from the caviar served at the cocktail hour to the golf foursomes were artfully selected. A camera crew was flown in to capture the event so each participant could have a commemorative video keepsake.
Members of the Chairman’s Club, the consistent top performers, had their own custom-made, crested blue cashmere blazers as proof of their fraternity; they wore them on these trips.
The sales force was DWR’s biggest investment; the firm knew how to motivate them to compete against their fellow office mates. And, as the cut-off for the contests would approach, brokers would ring our phones to check how much more they needed to sell to qualify.
Numbers, numbers, numbers; they never lie; whether in sales or salary.
Unfortunately, the same can be said for sales charges and commissions.
I wonder how many clients were impressed by the framed certificates adorning the walls of their “club member” brokers. Did they not realize that the accolades had more to do with their service to the firm than their service to their clients?
I am certain that if I had raised my objections to these incentives I would have been told that I don’t understand what motivates salespeople: They are competitive; they like to win. They will fight to the death to win a designer paperweight (in spite of the fact that the windows in their offices can’t open and there is no need for such an item).
Though I could never be motivated by these “carrots,” I do get it. I just don’t like it; there’s a difference. A zero-sum game is one I can live without.
I have a suggestion to these firms: Find people who are motivated by doing a good, honorable job for the client. That is their reward. That is their motivation.
It keeps their actions in line with pure intent. Everyone wins: the clients and the firm; though the firm’s winnings may not be as lavish. After all, if only the products that serve the needs of their clients are recommended, then expensive annuities and load-laden funds are not part of the repertoire.
When fat products feed the firm’s coffers, the client pays; always.
So I challenge these companies to adjust their compasses to align with their clients’ objectives. It’s called being a fiduciary.
Then, seek out other like-minded financial professionals with the same values; who aren’t shallow enough to be enticed by a tote bag.
Maybe all the money that they save on trinkets and trips will bridge the gap from lost commissions. Even if it doesn’t, perhaps they will be able to sleep better at night. I know their clients will.
But as I dream of this nirvana, the industry fights the fiduciary rule, lying about it in the process. They fail to see that advisors who do the right thing have good, solid businesses and clear consciences.
That is why attending a golf tournament isn’t our priority, or that of our clients (or prospective clients).
We wouldn’t have it any other way.