They'll stop at nothing!!

[ScaredtoQuit]

This past Saturday, I went to a retirement party for a friend who had successfully retired from MegaCorp after a 34 year tenure. The affair was really very nice. About a hundred of his close friends and family sat down to dine on a choice of chicken marsala, glazed salmon, or filet mignon in a beautiful setting to a background of light jazz. After everyone had finished eating and we had thorougly roasted the guest of honor, the master of ceremonies proceeded to thank all of the people who had helped pull the affair together. One of the guests was singled out and thanked for his financial contribution to the affair. That seemed a little strange to me and at the time I thought he might have been a representative from MegaCorp who had kicked in something toward the party. But then later on when the affair was completely over I learned exactly who he was.

This guy made a point of introducing himself to me and handed me a business card. He was a representative from a leading Financial Services firm and was culling for more business!! It was only then that I deduced what his game plan was. He cements his relationship with a new client by shelling out $3 to $5K for a fancy retirement affair. Yeah, it's a lot of money, but at $10,000 or more in new fees each year he'll make it back pretty quick. But the more important thing for him is that he changes the nature of his relationship with the retiree. He becomes the retiree's "friend". If the retiree ever considers terminating the relationship in the future, there is a good chance that the memory of that nice dinner "Joe" paid for when I retired might make him change his mind.

My theory was bolstered when I recalled another retirement party that I had attended a couple of years ago. The set-up was a little different (drinks and hor d'oerves - no dinner) but appeared to be no less costly. What I remember about that party was the prominent role that the retiree's financial advisor played. The FA had even presented all of the guests with a complementary CD burned with inspirational songs like "We've only just begun" - all with a little label that said "Compliments of XXX"

Is my assesment of this situation correct?? Have any of you seen similar arrangements made by FA's for others? At this point, I can't possibly bring myself to tell my friend that he's been snookered. Who knows? Maybe he hasn't. What do you guys think?

[Culture]

In my industry, we call it "building a client relationship." The goal is to become a "trusted adviser." I think this is pretty standard in all consulting fields. I fail to see the problem.

[unclemick]

May10th, May 15th, May23rd - good old Kansas City BBQ - have four dinner tickets sitting beside my computer.

Senior Tax Advisors - educational - no attempts to sell --------.

Riiiight!

I'm 20 lbs overweight - and prone to being a smart ass - so I'd better not attend and ask questions. Hint - they want to 'help you' rollover your 401k when you retire.

heh heh heh - Now finding out how I got on the mailing list would be interesting?

[dex]

Originally Posted by Culture

In my industry, we call it "building a client relationship." The goal is to become a "trusted adviser." I think this is pretty standard in all consulting fields. I fail to see the problem.

This situation does give you an idea into why the Washington lobbyist issue is such a problem. Take a congressman on a golf trip or pay for dinner and the congressman has a relationship and felt obligation the the lobbyist. The difference here is that the person is commiting his own funds not the taxpayers.

This obligation has a strong pull. There are many people in the world who when cornered will not stand up for what is right or in their best interest but will go along.

The person for whom the retirement party was held should look upon the cost as marketing cost and not feel obligated to stay with the financial consultant.

STQ, you need to feel out your friend to see if he is open to your point of view or you could lose him. Remember that he just invested a great deal of money with this guy and in a way you will be telling him he is paying too much and make a mistake.

[tryan]

oh man, nothing like being in someones pocket after accepting a large "gift".

they want to 'help you' rollover your 401k when you retire.

When a Edward Jones rep wanted to "help" me I asked what his cut was ... (drum roll please) 5.5% !!!

[ScaredtoQuit]

At this point, I really don't know what kind of arrangement my friend made with the FA. Judging from what the name of the firm is, I presume that the FA is managing his money - not selling him stuff directly. As you know, this is a whole lot better than getting hooked up with an "FA" from an insurance company or a stock broker. So it really might not be so bad.

But what I regret is that I never got the chance to educate him on the merits of managing his own money. (which may or may not always be a good thing, mind you) Whatever the case, I suspect my friend is locked into this guy for a good long time. As Dex suggested, I can't see having a discussion with him about this for a good while.

[haha]

Originally Posted by ScaredtoQuit

But what I regret is that I never got the chance to educate him on the merits of managing his own money.

Usually we are doing well if we are able to influence people like spouses who are in a position to spend our own money, let alone others. Friends may think that help like this is little much.

BTW, the giving of a gift in hopes of creating a feeling of obligation in a potential client, lover or whoever is based on the psychological principle known as reciprocity. A very enlightening and entertaining book named Influence by Robert Cialdini deals with this and other tricks of the selling trade. As Culture said above, these guys want to be thought of as trusted friends and advisors, not salesmen. Recently I was sitting in a Starbucks observing a Financial Advisor do his stuff. The mark and his wife, another woman, and the FA were sitting together at a table. There was more animation and bonhomie at that table than at the next ten runners-up taken together!

Ha

[FinanceDude]

Originally Posted by ScaredtoQuit

At this point, I really don't know what kind of arrangement my friend made with the FA. Judging from what the name of the firm is, I presume that the FA is managing his money - not selling him stuff directly. As you know, this is a whole lot better than getting hooked up with an "FA" from an insurance company or a stock broker. So it really might not be so bad.

His guy could very well be a stockbroker or insurance guy with some "credentials"............

But what I regret is that I never got the chance to educate him on the merits of managing his own money. (which may or may not always be a good thing, mind you) Whatever the case, I suspect my friend is locked into this guy for a good long time. As Dex suggested, I can't see having a discussion with him about this for a good while.

It's a fine line you are walking...........some folks are more emotional about their money than their kids................. :P

[Mwsinron]

Originally Posted by tryan

oh man, nothing like being in someones pocket after accepting a large "gift".

When a Edward Jones rep wanted to "help" me I asked what his cut was ... (drum roll please) 5.5% !!!

Did you ask him if he can beat the index's by 5.5 every year?

[FinanceDude]

Originally Posted by Mwsinron

Did you ask him if he can beat the index's by 5.5 every year?

Well, his cut wasn't 5.5%, he only got 40% of that...........

[LOL!]

I've never been to a retirement party like that. But my friends don't use financial advisors that skim returns so much that it takes 34 years to be able to retire. Most of the do-it-yourselfers can retire in 20 to 25 years.

[FinanceDude]

Originally Posted by LOL!

I've never been to a retirement party like that. But my friends don't use financial advisors that skim returns so much that it takes 34 years to be able to retire. Most of the do-it-yourselfers can retire in 20 to 25 years.

How do we know he had an FA that whole time??

[Texas Proud]

Originally Posted by dex

This situation does give you an idea into why the Washington lobbyist issue is such a problem. Take a congressman on a golf trip or pay for dinner and the congressman has a relationship and felt obligation the the lobbyist. The difference here is that the person is commiting his own funds not the taxpayers.

This obligation has a strong pull. There are many people in the world who when cornered will not stand up for what is right or in their best interest but will go along.

Boy do you have it wrong....

It is not the lobbyist that are paying for the trips and food to get 'in'... it is the congressmen who call up and say "I need a check for XXX$$$... and oh, btw isn't your bill up for vote next week?"....

Thinking that the lobbyist are running the show is a bit backward...

[CyclingInvestor]

I find

http://www.fa-mag.com/

to be an interesting look into the FA industry.
There are many articles on "building client relationships"
and some of the techniques they use.

[Nords]

Originally Posted by CyclingInvestor

I find
http://www.fa-mag.com/
to be an interesting look into the FA industry.
There are many articles on "building client relationships" and some of the techniques they use.

I have a free subscription to "Wealth Manager" (formerly of Bloomberg) and it's equally eye-opening.

I also regularly have to stomp out the junk mail generated by my contact info "not" being sold or shared with anyone.

[Joss]

"He cements his relationship with a new client by shelling out $3 to $5K for a fancy retirement affair."

All things being understood now, perhaps I could just get cash and skip the doo-dah party.