Perspectives

Redefining Financial Advice

Dec 17, 2019

To celebrate Dimensional’s 30 years of working with financial advisers, we asked seven wealth management professionals how the industry has transformed to help clients.

From the earliest ages that I can remember, I wanted to get into investments, and so, I became a stock broker. And then I realized very quickly, that really wasn't investing, that was selling. When I first came into the industry, there were brokers, and there were people making cold calls. There was pressure to make more money, and I got a sense that I was stealing from people who weren't really know what they were buying. Literally that whole culture was "I need to make some commissions this month, I haven't talked to Joe for a while, I know Joe's got some extra money, I'm gonna call him and pitch this idea and see if it works for him". You really just want to close the sale, you're often tempted to sell the most expensive products. That's when I decided, I wanted to make a change. It's about 1993, '94 and we're hearing more and more about this fee model. Fee-based investing simply means we're not compensated by any products, by any commissions, we're only working for our clients. A lot of time I'm spending with clients, I'm not generating transactions of any sort. I'm asking about families, I'm asking about goals and dreams. So the process really starts with a lot of listening and understanding, what money means to the client, and where they want to be. But you don't sell performance. You sell a goal, you manage behavior. What they're really looking for is someone who can help them cut through all of the noise, all of the information that's coming at them. What every advisor has, is they're able to engender a relationship and trust with a client. Trust is the grease that kind of lubricates the wheels of the entire financial process. I think the big leap, is not just saying we put the client first, but actually putting the client first and putting your business second, and realizing that if you do well by the client, your business will do well. We must not just see our job as managing money, but in fact, you know, it's about managing lives. The spouse of one of my clients, she said, "You gave me my husband back. He stopped watching the market, he stopped watching the portfolio, he quit trying to manage this at night when he came home, and so you gave me my husband back, and all that time". I wake up everyday feeling great and proud and inspired, because financial advice, good financial planning changes lives.

Dimensional is celebrating 30 years of working with financial advisers, a collaboration that has helped change the way the world thinks about investing. To recognise that impact, we compiled 30 ways that investors can benefit from the industry’s transformation. See Part 1, Part 3.

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