Be Aware of Advisors who Display “Awards”
Dirty Secrets of the Financial Advice Business – Part 2
Does your financial advisor display several awards in his office? Does he tout an award at the end of his email or website? Is he really “America’s #1 Advisor” for the last five years running?
But is it really?
Have you asked yourself about the origin of these awards? Who is granting them and based on what criteria? Are they really awards?
First, what is the definition of an award? An award is defined as, “a prize or other mark of recognition given in honor of an achievement.”
Okay, so there has to be some kind of achievement. Keep this in mind.
Who offers these so called awards? Well, it turns out that many of them are created by various financial industry media organizations. They include Barrons, CNBC, Financial Times, Boomer Market Advisor, and numerous others.
One in particular – the Five Star Professional Wealth Manager Award (offered nationally by Crescendo Business Services dba Five Star Professional: http://fivestarprofessional.com/) – is not really an award. They state that; “The award methodology does not evaluate the quality of services provided.” When selecting an advisor what else matters?
None of their 10 eligibility criteria (http://fivestarprofessional.com/wm_research_stats, then select the city of your choice) are achievements of any kind unless you consider not being convicted of a felony to be an achievement? Some advisors may.
While advisors don’t pay explicitly for the award, in order for advisors to display the award in their office, on their website or in their email signature they have to pay. According to Five Star Professional, “Once awarded, wealth managers may purchase additional profile ad space or promotional products.” Could it be that this award giving is simply a money-making enterprise?
Five Star Professional tells advisors, “Five Star award winners also have the option to maximize the impact of their award by expanding their presence in the magazine or utilizing the customized marketing tools available through Five Star Professional.”
In other words, “Congratulations, you’ve won this professional award! But you have to pay us if you want to use it.”
Some advisors are happy to pay for “awards” and proudly display them in their offices and on their websites. Please don’t be fooled.
If this were your advisor, would you question his integrity? Integrity. If you don’t have complete truth, trust, and transparency with your advisor, then why is this person your financial advisor?
Is it time to make a change?
Cern Basher, CFA
President & Chief Investment Officer