An Interview with Dylan Ross

37 Comment(s)

1. Mrs. Micah | Mar 7, 2008 | Reply

   It seems like there are a number of people in the PF blogosphere who say “I like to help people with their finances. I’ve thought of becoming a CFP but I don’t like the conflict of interest.” Dylan and Ciaran, how would you recommend that a person who wants to be fee-only get started in this business? It seems like a lot of people have moved there from other types of financial planning but is there a straight route?

2. Dylan | Mar 7, 2008 | Reply

   Mrs. Micah,

   The biggest obstacle to becoming a fee-only planner is usually experience. When the only thing you are selling is your advice, you really need to know what you’re talking about. The CFP certification requires 3 years of full-time planning experience in addition to the education, examination, and ethic requirements.

   While it is common for people to get their start in brokerage or insurance, people do go strait to becoming fee-only advisers. There are two main avenues. First, you can go to work for another fee-only planner, like and apprenticeship, learning under the supervision of someone more experienced. Perhaps starting as a paraplanner or an assistant planner, then working up to associate and maybe eventually becoming a partner. It is often similar to how an attorney gets started.

   The other route is to start your own practice. The difficulty in doing this is the lack of knowledge and experience. Those that take this path often start small, part-time and helping those they know well, and then expand as they gain knowledge and experience. If you go this route, you really need a professional mentor to avoid making costly mistakes.

   It is probably a good idea to join organizations such as the Garret Planning Network or the Alliance of Cambridge Advisors or the National Association of Personal Financial Advisors. These fee-only groups, promote collaboration with fellow members, provide access to things like continuing education and discounts on professional liability insurance, and more experienced members mentor newer, less experienced planners.

   My advice to people that want to go directly into fee-only planning would be to find a local adviser with a business model similar to what you want to do and offer to take them out to lunch or for coffee so you can pick their brain. Many advisors have done this when they first got started and are very willing to pay-it-forward.

   Sorry for the long comment, Ciaran.

3. My Dollar Plan | Mar 7, 2008 | Reply

   Thanks for your insight, Dylan. I only wish I could get my grandma to understand the difference between the various types of financial planners to make an educated decision! Just calling it fee-based and fee-only is pretty hard to tell apart.

4. CHM | Mar 7, 2008 | Reply

   Hey Dylan. Just getting back into the office. Please write as much as you like;)

   I completely agree with you. I’m written this on other threads before, but the best way to get into this business, regardless of whether it’s fee only or fee based, (or any other channel) is under the watchful eye of an experienced mentor. Let me use an analogy…

   I played competitive tennis my entire life, and I took it pretty far, but in the end I wasn’t good enough. There are many reasons it didn’t work out, but one of the reasons was going to the wrong coaches early on.

   When parents (today) ask me for tennis advice for their child… I say the most important thing is to learn the fundamentals from an experienced coach. Kind of an elaborate setup here:)… but the exact same thing applies for getting into this business.

   Ms. Micah you have the right mindset, you want to help people where they often need it the most, with their finances. If youre looking to start in the advisory business… look for an experienced team of honest, credentialed advisors and soak up the knowledge.

5. Reinhold | Mar 7, 2008 | Reply

   Dylan, my only question for you is whether your swan is white, black, or grey? Based on the acronym you gave, I’ll presume white until you advise otherwise. ;-\

6. CHM | Mar 7, 2008 | Reply

   Hi Madison [from My Dollar Plan]… thanks for dropping in. Part of why I asked Dylan for the interview is because there is some confusion over fee only vs fee based. Frankly, as Dylan knows, I knew very little about the fee only end of things. After speaking with him, I’ve learned more.

   I plan on putting something together later tonight or tomorrow on (what I think) are some highlights of both avenues.

   With that said, in my eyes they are both excellent ways to go. What it comes down to in the end is working with good people you can trust. There are always going to be a few rotten apples no matter which channel you choose. I think you lessen the odds dramatically when you go with either of these channels. And even more so, when you run your business like Dylan does… pure advisory, 99% objective (Sure Dylan’s is 100% but had to throw in a 1% margin for error;)

   If I were looking for financial help… I would only start with a fee only or fee based advisor. I would only work with a CFP. I would look from referrals from family and friends and local professionals. I would ask to speak to a few of his (or her) clients. I would look for someone active in his her community (socially and professionally, like Dylan is.) I would go with my gut instincts.

7. Danyak | Mar 7, 2008 | Reply

   Gentlemen,

   I’m curious… is the fee only approach more a result of a marketing analysis, namely to reach those not ordinarily considering financial advice? As a lawyer, most higher income clients rather pay an expert to do everything, and leave the client with piece of mind. Explaining the entire process of a real estate deal, and expecting a client to do the finishing work, is not a reality. Your thoughts are appreciated.

8. Dylan | Mar 7, 2008 | Reply

   Ciaran said, “If I were looking for financial help… I would ask to speak to a few of his (or her) clients.”

   Many planners (myself included) don’t provide client references due to regulatory, ethical, and privacy concerns. I will provide references from other professionals, as long as they are not clients also, but I won’t give out the name of a client or ask a client to be a reference.

   @ Reinhold – Hopefully white ;), but having a plan helps to manage the grey or black swan.

   @ Danyak –The fee-only element is specifically about eliminating third-party compensation to remove the conflicts of interest associated with it. The fee-only concept is like a real estate attorney not selling title insurance and being paid a commission for that sale.

   Fee only doesn’t have to mean the client does the finishing work. Many fee-only advisers implement, they just don’t receive compensation from third-parties to do so. The hourly, fee only approach probably appeals more to the do-it-yourselfers and those looking for validation than it does to delegators looking to be hands off; however, there are advisors that implement the advice by the hour too.

   I think fee only does make planning more accessible to those that would otherwise not seek it either do to the conflict of interest or because they do not have enough eligible assets to make the required initial purchase or deposit from a commission based adviser.

9. CHM | Mar 7, 2008 | Reply

   Dylan - Actually I would re-phrase what I wrote. I would ask the advisor ‘if it’s possible to speak with one of his clients.’

   Please understand I don’t mean the advisor should disclose any private information. I think the advisor should be open to asking any of his existing clients if they’d be willing to speak with a prospective client. If the existing client says no, that’s fine too.

   The discussion the client and existing prospect have, and the amount of information disclosed is entirely up to the existing client. Maybe this could lead to problems in extreme cases, but I’d be comfortable with this arrangement.

   With that said, this situation has never happened to me and I’ve never been asked to do this. And of the things I listed above, if there was a hierarchy, this would probably be near the bottom of the checklist.

   Now with that said, if I was put in this situation, unless my B/D said this was not compliant (which I would take issue with) I would have no problems with it. In fact, I see the benefits far outweighing the drawbacks, especially if you are comfortable with your business.

   Now I know Dylan you are responsible for your own compliance, holding yourself to a fiduciary standard. I don’t see the problem, from any of the vantage points you mentioned, in responding to a prospect’s request to speak with an existing client.

   In fact, in the rare occasion something like this would occur (and again this has never happened to me in over 10 years) I would be more wary of an advisor that was guarded when approached with such a request.

10. Dylan | Mar 8, 2008 | Reply

    Ciaran, I know you weren’t implying that the advisor disclose any private information without permission. That’s not what I meant. Let me try to explain the reference dilemma.

    As a fiduciary, I am required to always place the client’s interests above my own. For me to ask a client to speak to a prospective client, I am essentially asking them to share what would otherwise be private information. In the case of a reference check, this may sound harmless enough. The problem for a fiduciary is that asking the client to do this is not in their best interest; it is in my best interest. In fact the client has nothing to gain in doing this; they may even feel uncomfortable with the idea. By asking, I have placed my interest in having new client above my client’s interest in privacy, a clear breach of my fiduciary duty.

    In considering whether the benefits outweigh the drawbacks, a fiduciary must weigh the client’s benefits and drawbacks, not the adviser’s benefits and drawbacks.

    Some may see this as “fiduciary overkill,” but if we try to pick and chose what is harmless and what is harmful, we may end up blurring a very important line. As human beings, we may also be more inclined to view something as harmless if it is in our best interest to see it that way.

    Every once in a great while, I am asked for client references, and I offer professional references instead. For the most part, I do not think this has deterred people from working with me.

11. CHM | Mar 8, 2008 | Reply

    Hey Dylan… what are you doing in on a Friday night… ha.

    I think there are a lot of assumptions built in to your logic, as there are mine, which is why I see this as a subjective issue, open to debate, where there will be different opinions. My problem is when one is considered right and the other is wrong.

    I think taking your stance is fine, but I think taking my stance is fine too. I do see it as a bit of fiduciary overkill, but I also agree there have to be rules that can’t be broken too. I don’t see this as one of them, as how can you rule on something so subjective. Instead, when it comes to something like this, I think you defer to judgment.

    Who is to say bringing the two parties together is in the advisors best interest? Who is to say this is not in the client’s best interest? Maybe the client would be happy to relay their experience to a prospect and the information exchanged could be good for both the client and prospect, which I think it could be.

    Who is to say this client may not say something that will rub the prospect the wrong way? And I can see you saying, ‘that’s exactly what I’m talking about (opening a can of worms).’

    I see it the opposite, by trying to over control this situation you could be doing more harm than good, therefore hurting everyone… how should this be viewed… you’ve pushed your bias to the forefront by not allowing something to occur that could be mutually beneficial… or at least one could argue it that way?

    The point is I see both sides, and to me it falls more along the line of preferences. I think there are more cut and dry issues for which to raise the fiduciary flag:)

12. Dylan | Mar 8, 2008 | Reply

    I hear what you’re saying. I just want to clarify that the breach is not in what might happen during or as a result of the conversation; it occurs with the very act of asking the client to be a reference. At that point in time, my interests are guiding my actions (I would not be asking for any other reason except to satisfy a prospective client’s request for a referral).

    “Who is to say this client may not say something that will rub the prospect the wrong way? And I can see you saying, ‘that’s exactly what I’m talking about (opening a can of worms).’”

    That’s exactly opposite of what I’m talking about. The possibility of rubbing the prospective client the wrong way or me looking bad shouldn’t even be considered. My obligation is to the client, not the prospective one or myself.

    Clients can still discuss their experiences with anyone they want, whenever they want. I’m not trying to control that or prevent it. In fact, I hope that they talk about working with me. I just won’t ask them to do it with a stranger so I may potentially get a new client.

    The client comes before myself or the prospective client, always, so I can’t think in terms of “everyone” or “mutually beneficial.” If I lose a potential client because of it, that will happen and it’s okay. Is a cost of upholding my obligation to clients. I do think it is a real stretch to think I may actually be hurting my client by not asking them to be a reference.

    I’m not saying that you can’t be a good advisor and still ask clients to give references. And, I’m not saying that ever adviser has to practice this way, but those that are full-time fiduciaries do practice this way. For us, the flag stays up the whole time.

13. clambelly | Mar 8, 2008 | Reply

    Dylan -thanks for the interesting article. I commend your approach and agree that the best advice will be given when you don’t have a financial interest or don’t need to sell a product to get paid. However, I do have some questions about this as a profitable business model. It appears to me based on your numbers (8-12 hours, at $150-300 per hr.) that you would need a very high volume of new clients each year to be remotely profitable. I also question that the upper middle class (i’m guessing that is your target client) would be willing to pay up to $3000 for advice and then have to pay another professional to implement your advice. So, while I think what you are doing is admirable, it almost seems like you should be run as a non-profit org. I understand the conflicts but this is also a marketplace. My personal opinion is that you can run a a much better business and still be ethical and avoid the inherent conflicts. The number one way is to have full disclosure of any conflict to your client. The client knows you need to make money. There is nothing wrong with a highly skilled professional making a lot of money. And I think you can be a more attentive and responsive adviser if you have less clients.

14. CHM | Mar 8, 2008 | Reply

    Hey Dylan… I understand your point of view and I stick to what I said in my previous remarks. I think you and I will probably disagree on more than a few things, but that’s what makes for a good exchange of ideas.

    Of everything you wrote above the one line that stands out is, “my obligation is to the client, not the prospective one or myself.” Do you think it’s possible that you, let me re-phrase that, that ONE, can be obliged to a fault, to the point where this could hurt a client? All I’m asking is whether or not it’s possible? The simple answer is yes. One could argue that by operating as a fudiciary you inject a bias, that could be doing more harm than good. Although I don’t think this is the case, one could argue that. This could go on and on and I see this turning into a philosophical debate.

    I think it’s fine that full-time fiduciaries take this particular stance (on client/prospect interactions) but that doesn’t make it the best way, and one of my early impressions after talking to you (and reading LWM) is that full time fiduciaries think their way is the right way, which may be the case, but that doesn’t mean there are not other points of view that work, as well.

    And again, I understand where this approach and way of thinking comes from (the history of massive conflicts of interest throughout our business) but I think you have to be careful not to overshoot it too much the other way, as well.

15. Dylan | Mar 8, 2008 | Reply

    @ clambelly – Most clients don’t need to pay another professional to implement my advice; they often do it themselves using simple, direct, low cost solutions. Part of the advice I deliver is how to do that. It is higher volume and does require a larger client base. My overhead is less than $3,000 per month, and I will reach maximum capacity when I am regularly billing about 100 hours per month. At that point, if I want to continue to grow, I will need to hire staff. Attorneys, accountants, and therapists have been working this business model successfully for a long time.

    @ Ciaran – I’m just explaining my reasoning, and I hope I don’t sound like I’m passing judgment; I’m not. It’s okay to disagree; as you said, “that’s what makes for a good exchange of ideas.” I agree. Do I think my approach is best? Of course I do. If I thought there is a better way, I’d do it. I hope that you think the way you do things is the best too. Who’s right? Hard to say, but I think we’d be wrong if we believed there is a better way and weren’t doing it.

16. CHM | Mar 8, 2008 | Reply

    @Dylan - Agreed, there’s different ways of doing things, and like you, I do think my approach is the best way, but there are a tremendous amount of similarities and overlap in the two channels. I’ll try and touch on some in an article I hope to have published for tomorrow night. And thanks for the exchange, think this is good for all involved, although had to push back my scheduled post a day, as they say… due to time constraints;)

    @Clambelly - I agree with your remarks: it is a marketplace and having full disclosure of any conflict of interest is a key point you make. At this point, a small piece of my fee based annuitized business comes from managed futures, C shares and one client annuity. These clients are fully aware of how I’m compensated here and I believe these investments make the most sense for those individual clients.

17. Art Dinkin | Mar 8, 2008 | Reply

    What a great discussion. As Ciaran put it “a good exchange of ideas”. Rather than give my entire opinion of the different compensation options (I’ll save that for a blog post in the next week or two), I will point out that in my practice I offer all compensation options for my clients; fee only, fee based on assets, and commission. The initial meetings with a new prospective client are all without compensation so we have an open environment to discuss the scope of the engagement as well as the compensation options. I leave it to the client to select the compensation structure they are most comfortable with.

    @Dylan - I applaud your obviously high standards, but I respectfully disagree. A client who seeks references from other clients is only exercising proper due diligence. Here is how I do it. When asked (and it happens somewhat regularly), I ask them if it would be okay if I shared their contact information with some of my existing clients. Later, I will ask existing clients to contact them and have a frank discussion. I make it clear to my existing clients that they should feel no obligation to contact the prospective client, nor should they disclose any matters they wish to keep private. Doing it this way allows the prospective client to do their due diligence without compromising my responsibility to my existing clients.

18. Reinhold | Mar 9, 2008 | Reply

    Practitioners!

    The highest fiduciary duty is to slowly but eventually put oneself and one’s colleagues out of business. Convince clients that what they should be paying you (a modest hourly rate) to do is compensate for miserable personal financial education: educate them that they don’t need you. Once you get wealthy doing this (lots of teaching to be done out there), do it pro bono for all clients, the ultimate expression of fiduciary duty (”overkill”).

    The best way to both represent one’s credibility to teach and to actually teach your trade is to fully disclose your personal portfolio and all financial statements. (Obviously, for family safety and reasons of identity theft, all names, SSNs, addresses, phone numbers, and account numbers must be redacted from statements prior to disclosure.) If you truly believe (certifications notwithstanding) you are qualified to do what you do, you will walk the walk, openly talk your walk, and convince every single client that:

    **It is in their best financial interest to not pay someone to advise them in financial matters, but rather (if they must) to pay someone to teach them how to handle their own financial matters.**

    Convince them that — like any comprehensive subject matter — 70% of the work is straightforward and easy to quickly master, while the remaining 30% can be picked up over the course of a few months to a few years (depending on specific needs) of dedicated self-study. Convince them by the numbers that several decades down the line, their net worth will be higher if they spend the time and perhaps some educational costs to figure it all out now. Offer to also teach their kids these things at no additional cost. Make it family education, how to establish modest legacy wealth, etc.

    If a client truly cannot be convinced of this, tell them that after some reasonable educational period that you will continue to advise them but that you’ll accept only charitable donations made in your name. (And spend your days figuring out how to better convince these lazy clients.)

    Putting yourself out of for-profit business through teaching-by-example is the most honorable and selfless act you could possibly undertake in the consumer finance world.

19. Reinhold | Mar 9, 2008 | Reply

    Hey Dylan, the swan on your webpage appears to be dark in light outline. A swan that looks white on the outside but is really black on the inside? ;-\ (Just having fun with the swan metaphor, of course.)

20. Dylan | Mar 9, 2008 | Reply

    @ Art – It is one thing to say that you offer hourly or flat fee services in addition to commissions, but a financial planner cannot be “fee only” sometimes or optionally “fee only.” “Fee only” is specific term defined by regulators including the CFP Board, which has ruled that CFP Board designees can only describe compensation as “fee only” if all compensation from all clients comes solely from fees. The Board even specifically prohibits using the term “fee only” to describe compensation received from a specific client if other methods of compensation are used with other clients.

    As to your method of facilitating references, what you are describing is essentially delivering a client testimonial, which would be against the law for me to do. Furthermore, whether I get permission from the client to be contacted or ask the client to initiate the contact, I am still basically asking them to do me a favor, which is a breach of fiduciary duty.

    By not doing this, I am not holding myself to a higher-than-fiduciary standard; it is simply a fiduciary standard.

    I’ve tried to be clear in prior comments that I am not opposed to asking for client reverences or to the people that give them out. I’m not; I just don’t do it. There are many financial planners that don’t. Most attorneys don’t, and I don’t think many doctors do either. Professional references? Yes, but try asking an attorney for client references or a doctor for patient references.

    Additionally, if I did provide client references, wouldn’t I give out the names of a clients that I know will speak highly of me. If I had unhappy clients, I’d have to be a complete idiot to use them as a reference. Could you imagine someone saying, “here, call Bill and Lisa, some of my advice didn’t work out so well for them, and they think I’m padding their bill. But you should really hear what they have to say.” So, are one-sided references really due diligence?

    The client’s that really like me and speak highly of me do so anyway; I know because they refer others to me.

    Bottom line: I don’t do it; I’ve said why. If others do, that’s fine.

    @ Reinhold – It’s actually white and transparent I guess if I called it White Swan Financial Planning, no one would see any value in doing that.

21. CHM | Mar 9, 2008 | Reply

    @Rheinhold - interesting remarks and what you are actually describing is close to the goal of my blog (education for nothing, maybe donation to charities), stay tuned to see where I (as well as others) can take it.

    I like what you said and think education is the key, but to think people are going to be capable, or even want to be capable of performing some of the more complex planning issues is unrealistic.

    I agree with you when it comes to personal finance issues:teaching how to create budgets, illustrating ways to reduce expenses, increase savings, creating spreadsheets, snowflaking debt, reducing use of credit, changing buying and spending habits, growing your own food, learning to live frugally, making retirement plan contributions etc… what you say makes sense, and thank God for the Dave Ramsey’s of the world. If I’m not mistaken, many of the fee only planners specialize in this.

22. Reinhold | Mar 9, 2008 | Reply

    CHM, perhaps more people could handle it than you imagine. A funny thing happens when you give people responsibility; they *tend* to be become more responsible. Give them a complex planning issue, lay out the salient points for them, tell them where they need to go to get the information to build the plan, and see what happens. If it’s too hard for them, they’ll come back to you and give you some business, with a newfound appreciation for your specialty and expertise. If it’s not too hard for them, then you’ll have injected a fat slug of goodwill into the universe by enabling a fellow citizen toward financial self-sufficiency. They’ll send their friends and family your way for education. ;-\

    (Disclosure: I’m not a financial professional of any sort, but in the context of my own specialty I always offer knowledge and expertise to individuals — not business entities — pro bono, and never ask anything in return. If the project gets big, I would probably require some at-cost reimbursement for expenses. Sure it feels good, but more importantly it just seems like the universe works better this way. I expect that most of my future business contacts will be made this way.)

23. CHM | Mar 9, 2008 | Reply

    well said Rhein… may quote you on that first paragraph at some point down the road… like your use of the phrase, “fat slug of goodwill”… nice one!

    Like I said, would love to play a small part in doing much of what you described. Looking to have a theme for April revolving around helping people to do things for themselves. It’s always been my hope to bring something I call ‘down home planning’ here. Take a look… http://chancefavors.com/2007/08/down-home-financial-planning/

    I wrote that post many months ago and since then I have begun to look at different software, as opposed to straight financial calculators… more to come on all fronts… it’s happening a lot slower than I had hoped as I continue to struggle with time management, but I’ll get to it very soon.

24. clambelly | Mar 9, 2008 | Reply

    Reinhold - I totally misinterpreted your post. I thought you were being extremely sarcastic - and I enjoyed it. Now that I know you guys are serious about this, I must ask: Are you logging in from Norway or Sweden or maybe some Utopian commune? I really thought your first sentence was a joke. I am a proud liberal Democrat but you guys take the cake. There is nothing dishonorable (a logical extension of your last statement) in making a healthy profit by providing a valuable service. There is a place for pro bono advice and non-profit orgs and I encourage everyone to be involved in those types of enterprises. But there is also a place for making a profit. There is nothing unethical about that. On re-reading these posts, your and Dylan’s insinuations are starting to sound a little holier than thou. If you want to crusade to educate the masses for little or no profit, so be it and God bless your efforts because they truly are admirable, but I whole-heartedly disagree that there is anything wrong with taking a different approach.

25. Art Dinkin | Mar 9, 2008 | Reply

    @Reinhold - I agree with you that financial planning is not magic and could be learned by most people. I tend to look at three distinct groups.. 1) Do it yourselfers 2) Could do it yourself but choose not to and 3) Can not do it yourself. My practice is geared to the 2nd and 3rd groups. I am happy to educate anyone who wants on financial matters. That is why I write a blog (and accept absolutely no compensation or advertising) and also teach as adjunct faculty at a community college. Fact is, most people do not have the time, desire, or both to do their own financial planning.Similarly, I understand auto mechanics and know how to change my oil. But I have made a decision to pay someone else (a lot more than it would cost me to do it myself) based on time, convienence, and desire.

    @Dylan - When I refered to fee-only, I meant that I offer the client the opportunity to enagage me at an hourly rate. When such an arrangement is made, I do not accept commissions or other compensation from the same client. Based on your comment I checked the CFP Code of Ethics and found the advisory opinion which agrees with you. Thank you for pointing out my oversight however unintentional. That is why I should not write a comment on a weekend evening from home.

    Also, I do think your decision to not provide references is a higher than fuidicary standard and I applaud your application of your ideals. However, I do not feel my method is a breach of fiduciary. Again I reference rule 501 of the CFP Code of Ethics which clearly states, that with the client consent disclosure of our relationship is not inappropriate. What law prohibts your use of testimonials?

26. Danyak | Mar 9, 2008 | Reply

    Interesting dialogue. Why isn’t full disclosure and transparency enough? While I agree many situations may have the appearance of a conflict of interest, if the practitioner (whatever the specialty) fully informs the client and said client has no issue with it, i see absolutely nothing wrong in going foward. However, I always get something in writing to that effect, much like a pre-nup… being prepared for something that you don’t ever plan on occuring. Is one goal of the fee-only approach to minimize potential liability?

27. Dylan | Mar 9, 2008 | Reply

    @ clambelly – No one is saying that there is anything wrong with taking a different approach or claiming to be holy-than-thou. I deliver financial advice for an hourly fee. I like what I do, and I’m passionate about it. There’s no need to read anything more into it.

    @ Art – It’s not a question of having client consent; it is the act of asking for that consent for a self-serving purpose. As for testimonials, they are prohibited by rules promulgated under the Investment Advisers Act of 1940. They are considered “a fraudulent, deceptive, or manipulative act, practice, or course of business.”

    @ Danyak – Fee-only still has conflicts of interest, and they are handled in much the same way. I’m not sure that it reduces potential liability other than there is no chance of me making an error while handling a client’s money because I never touch client money.

    I’m happy to answer questions about fee-only or why I chose it, but I want to be clear: I am NOT saying that other-than-fee-only is wrong. There is a segment of the population that wants this arrangement, and I serve that segment.

28. Reinhold | Mar 9, 2008 | Reply

    Clambelly, yes I’m signing in from the exotic Utopian locale of East Coast metro-suburban North America. I don’t want to associate you too closely with your political party of choice, but your logic has stumbled spectacularly. Fabricated example: if I told you that there is an *absence of* evidence of typhoons in Sweden, would you likewise take that to mean there *is* evidence of *no* typhoons in Sweden? Just because I said that there is high honor in doing your job so well that you put yourself out of business (when your job is to educate/care for/advise people), you cannot presume that I also mean there is dishonor in continuing to make a profit by helping people. To draw that conclusion, you would have to believe that every act is either honorable or dishonorable, with no room for acts that are neutral with respect to honor. The only conclusion that you can logically draw is that I am saying in not pursuing fiduciary duty to its practical extreme, one has not chosen the *most* honorable course.

    Apologies for any holier-than-thou energy I may have emitted. I was only piping in on the fascinating philosophy of fiduciary duty. I believe that it is indeed in any individual’s best financial interest to learn how to match or exceed the investment results that an advisor could achieve on her/his behalf. Once an individual can do that, her/his interests are best served by no longer dragging down investment results with advisory fees. Like Dinkin says, there are three categories of clients in his view. If in cat 1), convince the client s/he doesn’t need you (very much). If in cat 2), convince the client s/he needs to be in cat 1) and you’ll help her/him get there. If in cat 3), convince the client s/he needs to be in cat 2) and you’ll help her/him get there. Repeat until all clients are so educated and are on a wealth vector.

    I think financial advice is more like therapy than some perpetual service. Lack of financial education can be debilitating and needs to be treated, but eventually one wants to discharge all of one’s patients.

29. Reinhold | Mar 9, 2008 | Reply

    Dylan, I have nothing against what you do for your clients, but I’ve been curious whether you’d comment on my apparently radical suggestion: whether or not its lettered in some code or law, would you agree that what is in the best interest of any given client is for you to convince her/him that s/he needs to learn everything you know so that s/he no longer is in need of paying you for your services? I understand that some clients don’t want to be bothered, but would you quietly go along with that and continue to enjoy the income from their business each your, or might you consider suggesting to them that they really can do better without you?

30. Danyak | Mar 9, 2008 | Reply

    Dylan,

    Despite the criticism, I actually applaud your approach. Being an attorney, I’ve often found myself battling the numerous negative assumptions of my profession. Convincing clients what’s best for them without having a financial stake in their success is often met with skepticism. In other words, most people’s defense mechanisms cause them to distrust/question etc. Your approach disarms that arsenal. Hope you set an example for others to follow.

31. CHM | Mar 9, 2008 | Reply

    I would just like to thank everyone for taking the time and effort to express the many different viewpoints.

    This is officially the longest thread I’ve ever had on my blog and I’m happy for the exchange of ideas!

32. clambelly | Mar 9, 2008 | Reply

    Dylan - Thanks again for the article the interesting comments that followed. I agree that there will always be conflicts and many ethical crossroads to navigate throughout your career regardless of the fee structure. Best of luck in your practice. I will check out your site and look forward to reading more about your approach.

33. Dylan | Mar 9, 2008 | Reply

    This has been a great exchange of ideas. Thank you, Ciaran, for hosting this exchange.

    @ Reinhold – I do agree with that premise, and so far it has been my experience that recurring engagements do get shorter. I’m sure that trend will continue. Most of my clients are already do-it-yourselfers to some extent, so they come to me ready to learn. It actually does not take that long to teach someone how to invest or create a budget; however, some of the other functions I perform may have steeper learning curves. I don’t think I’ll be putting my self out of business because, as you stated earlier, there is “lots of teaching to be done out there.” I am also able to use my professional knowledge and experience to evaluate the health of someone else’s personal finances as an objective observer and provide valuable input, something I think would be difficult to do for oneself. So difficult in fact, I will on occasion seek the opinion of another financial planner for myself.

34. CHM | Mar 9, 2008 | Reply

    Man, it’s been my pleasure… I wish the comment threads were like this all the time.

    One final question Dylan… after the discussion here, it’s obvious to me, there are a lot of strong opinions and interest in what you do… ever think of writing your own blog?

35. Dylan | Mar 10, 2008 | Reply

    Sure, I *think* about it. Maybe one day.

36. Art Dinkin | Mar 10, 2008 | Reply

    Thanks to all for a good discussion. I even learned a thing or two.

    @Dylan - I have never heard of a testimonials being considered “a fraudulent, deceptive, or manipulative act, practice, or course of business.” from IA of 40, but I would be interested in hearing more. I would also welcome the opportunity to communicate with you off line. Send me an email to adinkin at centralfinancial dot com and let me know the best way to reach you.

    @Danyak - I agree about full disclosure. There is no perfect system and the key is making certain the client understands the method of compensation. It is interesting that you are an attorney. When Dylan said he was building his practice similar to a law practice my first thought was “we all know how the public views lawyers and their compensation”. Frankly, lawyers are intergral to me as a business person as well as to my practice. As a client lawyers have helped me in many ways and saved me a lot of money and frustration.

    Just to make sure I was clear, someone said something to Dylan “despite the critisim”. I never intended to be critical of Dylan or anyone else on this thread. If I was, my appologies. From what I have read that Dylan has written, I hold Dylan and his ideals in high regard.

37. Art Dinkin | Mar 10, 2008 | Reply

    Oh, and Dylan. You really should write a blog. Please talk to me about that when you contact me off line.

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