PRACTICE WHAT YOU PREACH, FINANCIAL PLANNERS!

A client can easily check the disciplinary or regulatory history of their insurance brokers, financial planners, or agents by looking at their registration online or calling the company they belong with. Planners can also look into how they manage their own personal assets and investments.

Financial planners, are you practicing what you preach? This article will outline some of the measures that can help you promote professional integrity in the industry.

Keep your credit history as clean as possible. The extent to which financial advisors must reveal details about themselves to the public depends on how they are enlisted. It is much easier for registered investment advisors (RIAs) to disclose personal finances than securities licensed personnel. The latter is required to submit a current credit report to every new broker or dealer they attempt to register. Any questionable report will prohibit an individual from being enlisted. During the hiring process, all brokers/dealer check an individual’s credit since they are normally authorized to pull a credit report at their discretion.

There is also the securities license renewal application, which registered representatives must complete every two years. The said application asks about bankruptcy or outstanding judgments from creditors. The audit form also asks for any material change in the representatives’ financial status since the previous year’s audit. If the representative plans to leave their current broker/dealer, the personnel must keep their credit in good order for whatever reason.

Eat your own food. How can financial planners convince their customers to buy their product if they do not use it themselves? Before marketing any product, a financial planner should try at least some of the products they recommend to their clients. That way, they can better advertise the products to the clients, and directly relate to them unlike those who do not use their own product. Same thing applies to mortgage brokers and insurance agents.

But that is not always the case. One size does not fit all. Planners have various personal circumstances, risk/reward scenarios, and financial objectives. This may require a different product or strategy than those they suggest to a client. Nevertheless, the planner can have a sound, diversified portfolio fitting his own risk tolerance and time frame, and can also integrate some of their products.

Publicize your portfolio. To show clients how you manage your own money, make your personal investment portfolios public up to certain degree. Give an up-to-date list of own holdings, either in printed form or on the company’s websites. For a proper reference, provide personal risk tolerance and time horizon. Those who are transparent with their financials can publicly show faith in their own investment choices, as well as communicate directly with their clients especially when the portfolios’ values increase and decrease together. Being a successful financial planner starts with you. Control spending, avoid taking too much risk, and update estate plans. Financial disasters are inevitable, even financial professionals experience it. But planners with such dilemma can still maintain a good professional image by resolving it, protecting their assets, and recovering the losses as soon as possible.

Practice what you preach, financial planners. This will keep the trust of your clients for a longer time. Guaranteed.