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Author: TheBadger Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19257  
Subject: Re: CFP's Date: 2/28/2000 7:17 PM
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TheBadger, you are just about as confrontational and derisive as jasmada.

IMNSHO, I beg to differ.

Let me just say that you would have an ethical problem (which you did not disclose) as a CPA if you did taxes or audits or writeups on a contingency basis.

You are 100% correct & I have never in the past and never will in the future provide any service to any client for other than a straight forward fee; either T&M or fixed fee.


Violation of ethics rules. If it were not a violation, and you had grown up in the business where that was acceptable, then you would probably have a different opinion about commissions.

Not true, I will explain below.

That does not mean you would not be honest and objective in all your dealings with a client. However, some wouldn't, so that's why they have the rules. We all have conflicts of interest, whether or not we are fee paid, commission paid or a combination thereof.

Again, not true, I have absolutely no conflict of interest in my representation of a client. My efforts are 100% in favor of the client & absolutely no one else's. Professionally & morally, I have no one else's interests to bear other than the client's. The rules in our profession are structured so we can say that.


The trick is to look past the conflict of interest and do the right thing for the client.

Again, not true. <grin> You don;t have to look past it if it isn't in front of you.

To say that you would not do business with anyone who gets paid a commission is disingenuous to say the least, and I daresay that you pay somebody a commission every day.

Again not true in the sense that that is not what I said. Yoy need to read the posts a little more carefully. More following.

In defense of commissions, I must say that it is the most efficient way of doing business, as it rewards "labor" for effectiveness, and drives out those who are not effective.

I would only causally take the opposite view particularly as it relates to the change in commission structures in the securities & insurance industries over the last 20 years. One only needs to ask why the commissions were so high 5, 10 , 15 20 years ago compared to where they are now. If anything, closed commissions structures of the old days did more "coodling" than "driving out".

jasma, as abrasive as he is, over a long period of time can be the most effective of providers of long term care coverage, if he looks past the conflict of the commission and does the right thing for the client.

He could; he might; but how do you or I know as a potential client? Once conflict of interest, and its potential downside risks to the purchaser become apparent; it's pretty hard to simply dismiss their existence & equally hard to determine if they are influencing a potential transaction for profit.


The guy at the next desk might not be able to do that. You could be the best provider of tax and financial services advice on a fee-only basis that exists.</>

I believe so.

Or, you could pad your hours, not perform work that you say you did, or assign the work to others who are inept and pocket the difference in the fee.

Again, I suppose I could; but what you describe is "theft" or "deceptive trade practices" both of which are cause for: 1. loss of license; 2. loss of certificate; 3. fines; 4. time in jail; and neither of the points you make have anything to do with conflict of interest.

Now, let's start at the beginning. This all started when Jasmada declared that when one wants to obtain (certified) financial planning services; that it did not matter whether the planner was paid: 1. out-of-pocket fixed fee; 2. planning services were free but the planner also sells products for which he receives a commission; 3. Some mixture of 1 & 2.

IMNOSHO, this is pure *(&)&*%^%. I pay commissions for stuff I am assuming most days of the week whether I know it or not. And further, there is absolutely nothing dishonest about a commission & every salesperson in the world is entitled to maximize their commissions & enjoy the fruits of their labors; however, a salesman should and most do declare that they are infact salesmen & not something else. Further, we all expect a salesman to: 1. earn a commission; 2. to have his or his employer's best interests at heart. We all know it, expect it & in certain industries can enjoy (or anguish) in the conflict; e.g. attempting to purchase a car.

HOWEVER, and it is a huge however, don't for a moment attempt to convince me or anyone else (because it is simply false on its face) that a CFP who is also: 1. an insurance broker; 2. stock/bond broker 3. mutual fund saleman; 4. real estate broker is: independent and/or has the client's best interests at heart or has no conflict of interest when the "financial plan" is prepared for free and the guy hopes to sell his products as part of plan implimentation. I'm sorry, I've heard it before; I've seen it before and its a lie; it's simply a matter of degree. CFP/life insurance salepeople are the worst becuase there are no "unsuitablility" standards; as a result, I see clients at my door; loaded to the gills with high commission; high expense margin; high termination fee; deferred annuities that never, ever should have been sold in the first place. Why did it happen? Because a less than financially astute couple went to a a financial planning seminar for free; did the follow-up with the salesman (who presents him or herself, not as a saleperson, but as a financial planning specialist) got the "free" custom tailored plan; AND GUESS WHAT; to neither your suprise or mine; the plan (it was right there in black & white) said that the couple should purchase deferred annuities from Duey, Cheatum & Howe Life Insurance Company. In plainer English, this not-so-hypothetical couple got bamboozled, snookered, taken-to-the-cleaners, or whatever other word you might like to use on it because: 1. the salesman lied through deception & 2. had a clear conflict of interest which was never disclosed; resulting in net harm to those people. lastly, and this is almost the sickest part of it: the life insurance saleman / financial planner does not even know he or she lied to the clients because that's how they were taught.

In summary; do not get me wrong; I favor & in fact enjoy the art of salemanship & those people are deserved of all the commissions they earn. However, when the salesman dons the sheep's clothing of a financial planner (certified or otherwise), I say shrear the sheep & cook some mutton.

TheBadger
(who only holds one license)






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