[Infographic] How to Survive a Commissioned Financial Rep Encounter

[Infographic] How to Survive an Encounter with a Commission-based Financial Representative

Survive Your Encounter with a Commissioned Rep!

(Just here for the infographic? Click here to jump to the bottom!)

You may recall advice occasionally given for bear encounters: play dead.

This works surprisingly well for financial representatives, too.

In my years as a commission-based financial planner, it was the most efficient way to get rid of me.

More...

  • Never answer the phone
  • Never respond to email
  • Never call back

Some people would pretty much play dead. I was helpless but to move on with my life.

Play Dead!

I didn’t understand why people would not talk to me. Why not simply tell me you weren’t interested? That hurt, but at least it was more courteous.

On second thought, that was just self-righteous indignation; deep down, I understood why some people behaved that way. They had dealt with salespeople in the past.

And when you are paid by commission – paid only as a result of selling something – you are, by definition, a salesperson – even if you offer financial planning for free. Even if you are merely trying to grow your network.

Every commission-based salesperson should prepare to be treated as such. After all, the easiest way to get rid of a telemarketer – the quintessential salesperson – is to hang up.

It’s rude, but that seems to be most people’s default solution.

I wasn’t like the last dogged salesman they dealt with (and I hope my former clients would vouch for me), but the people I was calling did not care to find out.

In hindsight, I don’t blame them. They “played dead,” and I went away.

Different Bear, Different Approach

The “play dead” guidance works with defensive bears. For aggressive bears, however, the advice is different. Perhaps for the overly aggressive financial representative – the one who seeks you out at your office or in other social settings – this may come in handy. As such, I have replaced “bear” in the following text from the Bear Smart Society with "financial rep" and "rep."

Talk to the [financial rep] in a firm voice. Get out of its way if you can... If the [rep] follows you and its attention is clearly directed at you, the stand your ground and prepare to use your deterrent.

Act aggressively. Look it straight in the eyes and let it know you will fight... Shout! Make yourself look as big as possible. Stamp your feet and take a step or two toward the [financial rep]. Threaten the [rep] with whatever is handy (stick, pole, [financial rep] spray). The more the [rep] persists, the more aggressive your response should be.

Three questions in case of capitulation

Of course, if you care about that rep’s feelings, or become interested in what they’re saying, playing dead, looking big, or acting aggressively are not your best exit strategies. You may find yourself helpless in the face of their charm or insistence.

Whatever the case, if you wind up “just grabbing coffee” together, below you will find three questions to work into your conversation. More importantly, you should seek to discover and understand for yourself the real answers to these questions.

1. Are you a fiduciary?

This means they are required to act in your best interest.

An answer in the affirmative will help their case but does not guarantee they are knowledgeable, free of conflicts, or even compelled to act within the law.

The real value in this question comes if the answer is “no.”

That is your bright, flashing signal to Get Out!

If your financial rep is not acting in a fiduciary capacity – Get Out!

Click to Tweet

If you’re feeling generous, before parting ways, tell them to consider operating in a fiduciary capacity in the future.

2. How do you make money?

Unless an advisor is “fee-only,” they are paid by commissions and other fees. Some of these are obvious. Some are not.

Often these expenses are presented (if at all) as standard or unimportant. A percent or two may not sound like much, but it can be upsettingly significant over a lifetime.

Know ALL the associated fees and commissions. Use the internet to research, understand their impact, and compare to other available options.

3. What are your business goals (for the year, month)?

Beyond the altruistic “I just want to help people,” find out what actually motivates them.

Beyond the “I just want to help people,” find out what actually motivates a soliciting rep

Click to Tweet

Most reps have business goals that have been set by their superiors or by themselves.

  • They are attempting to sell a certain number of products this month.
  • They can get recognized on the stage at their next meeting if they sign up a certain number of new clients this year.
  • They need to sell a certain amount of premium to win a great prize.

What are their business goals, and how will this affect their recommendations?

How does their employer structure their compensation? Which products ultimately make them the most money? Are commissions weighted such that they will be tempted to unnecessarily upsell to you?

Does the company have a recognition system that rewards them for selling you a greater quantity of individual products? Which products count toward those totals?

Knowing what ultimately drives the representative will help you understand and evaluate many of their individual recommendations.

Tips for Bear Encounters

Use extreme caution if you let a bear within striking range.

I am not suggesting all commission-based financial representatives are bad. I was one, after all. I was misguided; it took me a while to discover a better way to serve my clients.

Here are some prudent tips to keep in mind:

Use Extreme Caution if You Let a Commission-based Financial Rep within Striking Range
  • Uncover what truly motivates the person selling you their products or services.
  • Do your own research.
  • Find multiple intelligent, trustworthy sources of information (e.g. www.investopedia.com, www.investor.gov, or other advisors).
  • Know and compare ALL your options (a commission-based financial representative is not going to share that information with you).

Takeaway

Just be careful out there; some ill-intentioned financial reps are sly and extremely convincing

Click to Tweet

Let me know your thoughts


  • What resources have you found helpful in navigating your interactions or dealings with commission-based financial reps?
  • Do you see it another way? I’d love to hear the other side!
  • What additional advice can you share that might help others?

I hope you enjoy my infographic.

Stephen Spicer

Stephen Spicer, CFP®, AEP®, CLU® is the founder and managing director of Spicer Capital, LLC. He is married to his high school sweetheart, and they have three amazing boys.

>