The Importance of Choice as a Financial Professional
I started in this business in 1983 with the Cigna Corporation doing fee-based financial planning on a consultative basis to clients. Cigna was one of the first firms to introduce a sophisticated comprehensive planning approach to helping clients meet their needs. More importantly, Cigna allowed me to be independent and have choice when it came to the solutions and services I provided to my clients.
Over the next 34 years, I chose only to affiliate with independent firms like Cigna because I felt that the best way to service my clients was to use an independent, objective, and choice-based platform. Today, as we build out the next evolution of IFP and launch our own broker-dealer, we’re fiercely committed to making sure our financial professionals have choice in the products, insurance solutions, and services they offer their clients. To help explain why I think choice is so important, I’ve summarized in this post some of the main benefits of choice for financial professionals and their clients.
Serving Different Needs
One-size-fits-all or limited options, in my opinion, provide for inferior outcomes. Clients have different needs and objectives that many times can’t be serviced effectively by limited options. Captive firms that limit choice often restrict a financial professional to using proprietary investment products with clients who could benefit from other products if they were available. They also often force the financial professional to use a proprietary financial planning software or performance reporting tool that may not be as sophisticated as another tool a financial professional might have chosen had they had the flexibility.
Faster Technology Implementation
Speaking of technology, platforms that support choice for financial professionals typically bring on new technology, products, and programs quickly as they become available. This enables the financial professional to keep up with the latest and greatest methods of servicing their client’s needs. Change is occurring faster and faster in our business and the ability to keep up with that change can provide a competitive edge for our financial professionals and a better outcome for their clients. Firms that take years to implement new technology will be left behind as the pace of change increases.
Cutting Expenses and Cost
A multi-choice platform can drive down expenses and cost; this is accomplished through competition and the ability to bid out services to multiple providers. For example, when looking for collateralized lending opportunities, by having multiple custodians available on a non-biased basis, you provide the financial professional and client the ability to potentially obtain a lower price for that lending, consequently saving them money in the process. Having multiple custodians also drives down the overall cost of ticket charges because each custodian is forced to compete more for the client’s business.
Client First Approach
With more choice comes a higher degree of complex decisions falling on the financial professional’s shoulders. With one-size-fits-all or limited choice platforms, a financial professional doesn’t have to make as many critical decisions, but that means a client who needs a more customized level service may not receive it. True independence is a financial professional who is aligned with an RIA or broker-dealer that will free them from limited options and allow them to select the platforms and programs that best meet each client’s needs. That is a client-first approach.
The best analogy I can think of is a patient in need of surgery. Would you be more comfortable with a surgeon that had only 2 scalpels, a stethoscope, and an x-ray machine? Or would you rather that surgeon have scalpels, lasers, MRI capability, chest expanders, etc.? The same concept applies to the financial advice world and this is one of the reasons we are developing IFP as a firm of choice. Our objective is to build the platform in such a way that it is easy to quickly implement new technologies and programs for the benefit of our financial professionals and clients. We believe the financial professional knows best when it comes to servicing their clients’ needs, and it is our job is to provide them with all the qualified tools possible to do so.