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Financial Planner won't provide references
Old 09-26-2012, 12:08 PM   #1
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Financial Planner won't provide references

I think this is a better forum to post this question:

I was about to sign a contract with a fee only FP who is a member of NAPFA and the Garrett Network, and also is a CFP. He's a nice guy who knows his stuff but when I asked for references he gave the excuse that his attorney said he can't because they could be considered "testimonials" and put him in a legal bind. We are in Illinois if that matters.

So, has anyone heard of this?
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Old 09-26-2012, 12:11 PM   #2
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He's correct regarding that testimonials can be considered advertising. Here's a quick answer to my google search, but this specific article is about LinkedIn testimonials.

Advisors Beware, Client Testimonials on Social Media = Advertising

While many advisory firms are avoiding using Facebook, LinkedIn and Twitter for marketing purposes until they receive more clarity from regulators on how to use these social media outlets, others are exposing themselves to possible regulatory actions, says Sheri Mushel, president and CEO of RIA Registrar.

As Mushel helps her RIA clients get ready for Securities and Exchange Commission (SEC) exams, which she says are on the rise, she reminds them that using Facebook, LinkedIn and Twitter is “considered advertising.” RIA Registrar is a Minnesota-based consulting firm offering regulatory, compliance and registration support for advisors.


One particular issue for advisors using LinkedIn, she says, is that they may inadvertently get testimonials from other people, which counts as advertising. This, she says, could get a firm dinged. To remedy this problem, Mushel suggests advisors “uncheck” the box showing referrals on LinkedIn so testimonials don’t show up.


And this is also relevant, had to take a bit longer to find the regulation:
The SEC Advertising Rule specifically prohibits an investment adviser from publishing, circulating or
distributing any advertisement that:
s Refers to any testimonial concerning the investment adviser or any advice, analysis, report, or other
service rendered by such investment adviser (Rule 206(4)-1(a)(1)); see discussion in Section II.C
below);
s Refers to past specific recommendations of the investment adviser that were or would have been
profitable unless the investment adviser complies with certain conditions (Rule 206(4)-1(a)(2)); see
discussion in Section II.D below);
s Represents that any graph, chart, formula or other device offered can in and of itself be used to make
trading decisions without prominently disclosing in the advertisement any limitations or difficulties in
its use (Rule 206(4)-1(a)(3));
3
or
s Contains any statement to the effect that any report, analysis, or service is free unless it really is (Rule
206(4)-1(a)(4)).


Above excerpted from: http://www.morganlewis.com/pubs/5FB3...ublication.pdf
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Old 09-26-2012, 12:15 PM   #3
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Have you talked with other IL based fee only FPs and have they given you the same excuse? I think of a testimionial as some sort of recorded statement by a client or customer and have trouble understanding how a verbal discussion between you and one of his clients is a "testimonial" and how the client's actions could get the FA in trouble.

Like I said in another thread it sounds fishy to me.

Perhaps rather than frame you request as "references" you could frame it as contact information for a few clients so you can ask them their perspective of his financial planning process and their satisfaction.
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Old 09-26-2012, 12:17 PM   #4
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He's correct regarding that testimonials can be considered advertising. ....
But Sarah, would providing references be risky?
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Old 09-26-2012, 12:32 PM   #5
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I have a couple of emails into other Garrett Network fee only advisors and have asked them if they have references. Otherwise it seems like buying a pig in a poke.

Perhaps the best way to to ask friends who are naturally skeptical like myself who they are using.

Thanks for your replies.
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Old 09-26-2012, 12:38 PM   #6
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But Sarah, would providing references be risky?
It doesn't matter what WE think, it matters what FINRA thinks..........
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Old 09-26-2012, 12:55 PM   #7
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Got an answer from the Garrett Network. I can't copy it here because of a privacy clause at the bottom of her email but the gist is: their members are not allowed to reveal anything about a client without their permission. They are allowed to provide "professional and character" references.

So.. I can't go with someone I don't know so I will keep looking for referrals from people I know and trust for an hourly consultant.
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Old 09-26-2012, 01:02 PM   #8
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It doesn't matter what WE think, it matters what FINRA thinks..........
Helpful.
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Old 09-26-2012, 01:04 PM   #9
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Got an answer from the Garrett Network. I can't copy it here because of a privacy clause at the bottom of her email but the gist is: their members are not allowed to reveal anything about a client without their permission. They are allowed to provide "professional and character" references.

So.. I can't go with someone I don't know so I will keep looking for referrals from people I know and trust for an hourly consultant.
What they told you though infers that a member would be allowed to provide contact information about a client with the client's permission, right? In most cases a vendor would get an ok from the client before using a client as a reference anyway.
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Old 09-26-2012, 01:18 PM   #10
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Yes, her email said that the planner would have to get permission from their client and then it would be OK. So I guess he hasn't asked any which is a marketing problem for him. Perhaps he is reticent to bother his clients with this?

Also, at my initial meeting I was very impressed with notebooks he creates of projections, graphs, etc. Now that I have drilled down and learned more about the Garrett Network I am realizing that they probably sell the software to do this, so I don't know how much of my plan would be his original hard work and how much would be just dropping me into a template. He estimated 15 hours @ $180 each for $2700 but now I am questioning the value, now that I see these organizations provide them with software.

I see on this site many people have educated themselves, perhaps I should get over the fear factor and keep plodding along. I haven't done that bad, the last 12 months is 5%, considering I don't trust Wall Street that isn't that bad.
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Old 09-26-2012, 01:22 PM   #11
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.......... Now that I have drilled down and learned more about the Garrett Network I am realizing that they probably sell the software to do this, so I don't know how much of my plan would be his original hard work and how much would be just dropping me into a template..........
My guess, the latter.
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Old 09-26-2012, 01:50 PM   #12
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Original Poster here.

Well, I just got an email from another fee only Garrett planner and she said, "I do not provide references, in consideration to client privacy."

So...I think I now know what to do: follow the newsletters I have been, educate myself further, read this board every other day.

Thanks
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Old 09-26-2012, 02:16 PM   #13
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Just as a data point, we wouldn't bother our clients in that way, either. We only get new clients through word of mouth, no advertising at all.
Some of those fancy templates can be done through the big firms, if you are inclined to take the time to enter all your data. That might be something you can do for yourself--try Fido and Vanguard and I think Schwab has something too, though I'm not familiar with the retail side.
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Old 09-26-2012, 02:20 PM   #14
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Thanks Sarah. You're fortunate to be in a biz that doesn't require an advertising budget!

Best,

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Old 09-26-2012, 02:23 PM   #15
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Thanks Sarah. You're fortunate to be in a biz that doesn't require an advertising budget!

Best,

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Nope, but we do have a hefty antacid budget!
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Old 09-26-2012, 02:53 PM   #16
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I have a couple of emails into other Garrett Network fee only advisors and have asked them if they have references. Otherwise it seems like buying a pig in a poke.

Perhaps the best way to to ask friends who are naturally skeptical like myself who they are using.

Thanks for your replies.
you can check for legal violations/reprimands via FINRA website, but I realize that's not nearly as good as a reference. At least it would weed out the REALLY bad apples.
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Old 09-26-2012, 04:03 PM   #17
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Lots of former employers won't provide references for their former employees either over this issue.
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Old 09-26-2012, 06:55 PM   #18
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Lots of former employers won't provide references for their former employees either over this issue.
That's how it worked at the MegaCorp I was employed at. HR would provide employment history (John Smith worked here from date X to Date Y) but absolutely would not provide performance ratings, reasons for termination, etc. We, as managers, were expressly prohibited from providing performance related references if directly contacted by a former employee's prospective new employer.
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Old 09-26-2012, 06:59 PM   #19
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Yes, but if you follow from the OP s/he is talking about something totally different - having a potential fee only financial adviser provide references - totally different situation IMO.
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Old 09-26-2012, 07:11 PM   #20
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Originally Posted by Cheesehead View Post

I see on this site many people have educated themselves, perhaps I should get over the fear factor and keep plodding along. I haven't done that bad, the last 12 months is 5%, considering I don't trust Wall Street that isn't that bad.
+1

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So...I think I now know what to do: follow the newsletters I have been, educate myself further, read this board every other day.
+2

The effort to educate yourself will pay off many times over. Plus, you'll have 24/7 personal contact with the guy managing your money - and the knowledge he's every bit as motivated as you are to do a good job.
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