The life of an advisor can be seen as an endless sequence of presentations. In any presentation, where you want to make a point or influence someone else's decision, you have five choices. Which of these do you do more often?
- Tell a big fat lie. Obviously, in this situation there's nothing ethical in telling a lie. If you lie to your prospects, you're probably not reading this article. However, let's say you approach your prospects telling them that you want to help them plan their life for their perfect calendar. You're doing "consultive selling." In other words, you're using the camouflage of consulting to make sales. Isn't that lying? Let's say you suggest the client buy a product that earns you a commission. Are you acting in good faith or are you just generating an income?
- Exaggerate. Is this really unethical? Exaggeration is better than outright lying, isn't it? Perhaps not. A big fat lie could be seen for what it is, but a crafty exaggeration could actually trick the other person. Ever hear the phrase, "Second to none?" Isn't that an exaggeration? After all, it implies that the firm or product has been judged to be the best. But, if others can occupy that space, too, isn't the claim really an exaggeration?
- Leave something out. This is simply exaggerating in reverse. And, of course, it's wrong. You might do this by remaining silent and letting the prospect convince himself, even though his logic and reasoning are flawed.
- Fill your language with disclaimers. In the financial industry, we're bombarded with legal disclaimers. "Past performance is…" Like politicians, we can "spin" facts to insinuate our conclusion.
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Communicate openly and without personal agenda. This is extremely difficult and rare, especially in a sales-focused industry. When you expose the truth, you expose the advantages and the limitations. That invites people not to hire you or buy your products. However, it is the only way to communicate ethically. The only way.
Ever test drive a Lexus? The sales person behaves like a guy just along for the ride. He is likely to remain silent throughout the ride. His behavior is anything but hard-sell. It says, "I'd love for you to own this car because it's perfect. But, I won't attempt to convince you of that. Instead, I'll let you figure it out for yourself."
As you might recognize, the first four choices are manipulative. Manipulation by a financial advisor is a subtle and devious form of domination. It's abuse, and it's a cousin to terrorism and desperation. It is behavior acting on a belief that we live in a world of scarcity.
Two Reasons. There are really only two reasons for a person to engage in any communication other than clear and transparent. The person either won't or can't disclose the truth.
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Won't. A mutual fund company might actively promote a fund's performance, knowing that when the new numbers come out, they'll show the fund underperformed. That's an example of "won't."
Can't. An advisor might promise to provide world-class service, and not realize the extent of his ignorance. Few advisors possess deep knowledge across a wide spectrum of categories. Deep and narrow means the advisor is incapable of providing many services, but he may not even know the extent of what he doesn't know. Not knowing what you don't know is an example of "can't"
Intent. Failing to communicate clearly is a flirt with manipulation. With that in mind, let's look at a pure puzzle in the realm of manipulation. The puzzle is this, just about any skill that will help you communicate clearly can also be used to manipulate or deceive. Think of anything that can be used for good. It can also be used to manipulate. From religion and food, to love and shelter – anything can also be used as a tool to manipulate. It depends on the intent of the person wielding it.
Sporting Questions:
All of these thoughts are meaningless if we can't apply them in real life through our personal decisions. So, let's play. Just dive in and answer the following questions:
- One of the larger financial firms announced that from that day forward its advisors would be "consultive advisors". That means they would give objective advice focused solely on the client's best interest. That same month, they released a memo announcing that advisors had to sell more of a proprietary product. Is that ethical or something else?
- A well-known consultant teaches a technique for discovering a prospect's values. The idea is to then use those values to paint a more attractive picture of your product or service. Is that ethical or something else?
- A speaker claims to be an expert in investor psychology, but her content is superficial at best. Is that ethical or something else?
- Bill agrees to pay a commission based on income generated from using a certain methodology. Rather than pay the commission, he renames the methodology and makes cosmetic modifications. Is that ethical or something else?
- Nancy photocopies key pages from a book authored by someone else. She then sends those pages to her prospects. Is that ethical or something else?
- Scott creates a white paper to help his credibility. In the paper, he inserts text taken from a book, but he doesn't cite the source. Is that ethical or something else?
Do you see yourself or someone you know in those questions?
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