"What's questionable about working one's natural market?

Easier to manipulate. It's hard for someone to say no to a friend or relative. It's harder for someone to see the truth about a friend or relative. And yet harder to get out of the mess, knowing that you'll have to face that person at every holiday, or even lose a friend.

And, in some firms, if you leave the firm keeps your natural market. They are not told this, of course.

Also, it's usually beginners that are forced by their firm to go after their natural market and these friends and relatives are the made to feel responsible for the new financial advisor's success.

I get to see it from the back end. The lifelong friend that became a salesman has pressured their buddy into investing through them. Because Cindy trusts Joe, she doesn't question him the way she would a stranger. She trusts him based on the friendship. Years down the road she meets me and is shocked to find out that she's paying tons of fees. She thought the planning fee she paid years ago was all she paid. And, when sge finds that she's way underperforming the market, she's just sick. Now she has to confront an old friend. Do you have any idea how hard that is? Yes, I bet you do.

The amount of manipulation that goes on in your business is amazing.

I should have differentiated between natural market; ie. ethnic group or whatever, as opposed to friends and family.  My comments were directed at those who target friends and family.

It's probably just my personal experience with some people I know who became insurance agents.  They call me with the pitch they've been taught and even when I politely decline, they persist.  And if I'm in a social situation with mutual friends and they are there, they will strike up a conversation and then suddenly transition into why I need to meet with them.  It makes me uncomfortable, and it makes the other people around us uncomfortable. 

There is nothing inherently wrong with working with people within your natural market (I just prefer cold prospecting because it keeps friends and business separate).  Most of us do it, I have several clients who were friends of mine.  The difference is, I didn't target them.  They know what I do, and if I saw any indication of interest I would follow up.  If there was no interest, I didn't call them every few weeks to try and get an appointment.  I didn't create a Top 100 list or whatever they call it nowadays and pitch everyone on that list.

I don't like to mix business with pleasure.  Even for those clients who are my friends, we talk about business when there is an appointment.  During social outings, we are friends and don't talk business. 

[quote=anonymous]

They work the fishbowls and natural market.  I find those two activities more questionable than cold calling, but neither is unethical.

What's questionable about working one's natural market?

"You have been told over and over and given numerous examples of the other services and investments that we provide that are not "equally weighted mutual funds (net of all expenses)" "

Please post a link to your published rebuttal of the study. So far, there has been no rebuttal at all published. None. Zip. So, go for it. Actually, I doubt you have even read the study.

Again, for the fourth or fifth time: Tell me what percent of salesmen do NOT sell mutual funds and show me a study that compares their returns with DIY returns. Because I'm figuring that if you can't choose funds and get decent returns, you're not doing any better with stock picking.

And, if we look at VA and VUL returns as compared to DIY returns, how do you think that will look? I recently compared a Riversource VUL with Vanguard mutual funds and I have a pretty good idea.

"Yet, you refuse to acknowledge that the investment portfolios we provide are complex "

Have you posted your scenerios on Vanguard Diehards yet? I'm waiting.

"Vanguard cold calls me every time they shove an advertisement into my personal space. "

No, they don't. You obviously do not know what cold calling means.

Call me all the names you like and threaten to kill me all you like. Bottom line, you hurt your clients FINANCIALLY. THAT's WRONG.

"No, you've backed your judgements with an agenda-serving "study" that doesn't even appraoch the reality of what I've seen over the years in this industry."

Where is your published rebuttal to the study, then?? The truth: "Assessing the Costs and Benefits of Brokers in the Mutual Fund Industry" is written by Daniel Bergstresser of Harvard Business School, John Chalmers of the University of Oregon, and Peter Tufano of Harvard Business School.All PhD's although some salesman on here claimed not one of them were. That salesman was wrong.

The study has been discussed in several major media sources and newspapers. WSJ, Money, Forbes, etc, etc. Not one rebutted the study. No salesmen have rebutted the study. Not even you.

Read this again: "It is important to note that the authors are not anti-advisor. Remarkably, they had the cooperation and support of some of the largest and most respected industry groups and research organizations in America in working on this study. " 

I'm not at all interested in your personal attacks on me. Instead, use that time to learn how to help your clients...or write a rebuttal to the BCT study. And remember: "It is very difficult to get a man to understand something when his salary depends on his not understanding it."
Upton Sinclair

I'll ignore Willie's post since he is obviously assuming that we are all manipulating people so that we can rip them off.  When we start with that premise, everything that we do is unethical.

Shadow, what your post points out simply is that there is a right way and a wrong way to approach one's friends and family.

Many of my friends are clients.  What happens after awhile is that in many instances, you can't really remember if they were friends who became clients or clients who became friends.  What I have discovered is that friends who become clients always end up better friends.   It's also true that many friends who don't become clients end up not being friends.  This isn't for any reason other than the reality of life as a business owner and a parent of young children.  Being a client "forces" me to spend time with friends.  Otherwise, unless our children are of the same age, we simply don't have time for each other.

I've never had a problem in social settings.  I have no desire to bring up the subject. 

Calling on friends and family in the beginning can really increase one's chance of success.  F & F probably won't become clients in the beginning because they know that the advisor is new, but they can be a great source of referrals.  It's much easier getting business from referrals than cold.

Now that I have a successful practice, I still call on friends.  If my practice was just investment focused, I probably would not do so.  However, the thought that of a friend dying and his family not being ok because I never made the phone call is not acceptable.  My work is important.  My friends need me.

Anyway, regardless of whether one does it or not, there is certainly nothing unethical about calling friends unless you are like William and would manipulate them and charge them too much in fees.

PS. I treat phone calls to friends just like phone calls to strangers.  The only difference is that I start every phone conversation by saying, "Hi, Shadow.  This is Anonymous making a business call.  Do you have a minute to talk."  I'll ask for the appointment.  They'll say yes or no.  If "yes" at the meeting they'll get treated like all clients.  If "no", I'll ask permission to follow up in 12 months.   I never turn a social call into a business call.  There is never a period of time where the client is thinking, "Ok, what is his real reason for calling?"

And remember: "It is very difficult to get a man to understand something when his salary depends on his not understanding it."
Upton Sinclair

Willie, with you, we can just change this saying slightly.

"It is very difficult to get a woman to understand something when her entire existence depends on her not understanding it."

I've got it figured out.

The studies such as the BTC study--and dozens of others--that reveal time and time again that a do it yourselfer will outperform most "financial advisors" is true.

What has happened is the handful of "financial advisors" who do better than do it yourselfers are all posting on this forum, and on the TGP forum, and on "The Clubhouse" forum.

Yep, makes sense to me.  As we all know people who are successful have loads of time on their hands for posting on message boards.

"Yep, makes sense to me.  As we all know people who are successful have loads of time on their hands for posting on message boards."

And, they all have 'interesting' personalities, threatening to kill people, talking about penises, calling women filthy sexual names, irrational, spending hours making fun of people. That's the new successful sales personality, I suppose.

So, we have a bunch of psychotic, nasty, irrational salesmen spending all their time posting on a couple forums (and making up a brand new one!) ...and they are the ones that are the cream of the crop.

Indeed.