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Stop Treating Financial Institutions Like Petty Thieves

Before I tell you about what may be the best read you will encounter this year, here are two questions for you to consider.

1. In August, Bank of America (BOA) agreed to a $17 billion settlement of a serious claim from the feds that it had engaged in widespread shoddy mortgage practices. But did you read the fine print of the settlement? BOA is not cutting a check for $17 billion to the Treasury Department. BOA is receiving “soft credit” for about $7 billion in new terms to existing mortgage holders, and other credit for mortgages it already sold to investment firms that still have to bear the burden of the lousy underwriting that was in place for years. Some analysts lifted their ratings on BOA because the hit to the institution is “only” about $10 billion in hard cash.  

Is it me, or do you think we need some diligent prosecutors to stop treating financial institutions like petty thieves?  I understand that some criminal judges will allow a convicted robber three months toward a 10-year prison sentence, but a convicted felon is not regulated. That felon doesn’t receive subsidies from the Fed to operate and receive loans at unheard of interest rates. That criminal doesn’t receive additional subsidies for a dazzling array of operations. If we are serious about penalizing financial institutions that break the public trust, no more soft credit should be provided. Agree or disagree?

2. I decided to conduct an informal but pretty accurate inventory at a bookstore at Los Angeles International Airport recently. Specifically, I wanted to look at what the public is buying to help guide them through the maze of financial and insurance questions they face daily. Obviously, the title of the book says a lot about how agents and advisors are, or are not, meeting their obligations. The “For Dummies” guides to investment, retirement, insurance and annuities continue to sell very well. The Wall Street Journal series on investment has a more Brooks Brothers-type cover, but the data inside seemed painfully entry-level. The Rich Dad Poor Dad series is tired but still selling, and the Suze Orman machine of dumbed-down financial advice is on steroids again.

My takeaway conclusion is that the high-net-worth clients avoid Jim Cramer and Money magazine because their agents are providing sound ongoing insight on insurance and other products. Meanwhile, the vast majority of consumers remain intimidated by the language and complexity of what you do every day. We need to find a way to break through compliance and offer sound advice so that we have Life Insurance Awareness Month every day of the year. You can help accomplish that by including a clear tagline at the end of every email you send that reminds clients about the opportunities available with products such as A, B or C.  This isn’t rocket science, but it’s a daily pushback against the “one size fits all” pundits. Agree or disagree?

Now on to how you may take an objective look at your practice and ascertain how you can maximize every opportunity with clients. Various advisors send me books to read and, candidly, most of them are junk. They’re self-serving, filled with personal stories about how the authors grew up in their hometowns and littered with dozens of senseless and poorly written references to clients and situations.  

Here’s an exception. Practice on Purpose by Phil Richards, Gary Schwartz and Ed Deutschlander is the book of the year on my list. Just published, the work offers practical and candid insight on how to acquire clients instead of prospecting for clients. It outlines, in a very creative manner, the five traits that mark the most successful agents. Best of all, the book ends with a series of insights about how North Star Resource Group, based in Minneapolis, became one of the most formidable insurance and financial planning firms in the country.

The authors share some of the tools they leverage daily to acquire talent as well as new clients. But the most insightful part of the book is an admission by the authors, who all grew up in a commission-only environment, that there is a place and a proper appreciation for the fee-only model. They acknowledge the strengths and weaknesses of both approaches and remain agnostic but informed. They admonish us to understand that if we refuse to acknowledge what is happening in the global markets, we do so at our own peril.

I don’t receive anything for mentioning this wonderful book, but I’d urge you to read it and then purchase a copy for everyone in your practice.

Keep motivating your team and remind them that when they deliver a death benefit to a client, they represent the one industry that delivers what is promised with no qualms or delays. It is, ultimately, one of the most honorable aspects of an industry that must continue to do the right thing for clients every day.


Larry Barton, Ph.D., CAP, is Chancellor of The American College. Larry may be contacted at [email protected] [email protected].

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