Yesterday's Toronto Globe & Mail Report on Business grabbed me with an article about the duties of financial advisors to their clients and how they are paid. It's hard to miss the parallel to our business as this piece explores the need for the financial services industry to assume their appropriate fiduciary duties.
The takeaway from this is that if consumers want transparency from the financial services industry they want it from the real estate industry as well. Consulting is clearly the way to deliver it real estate clients!
If you scroll down far enough after reading the article,
there's a forum section with some good comment. An individual writing under the name "Cash Money" drove the nail home with a great piece which I reproduce here...
True Story:
A few years ago, I thought I'd like to have a job helping people with their investments. So I went through a series of interviews at a major bank (it honestly doesn't matter which one since this story would apply to any bank).
My qualifications:
- Degree in Economics
- Completed Canadian Securities Course
- 15 years Investing Experience
- Complete understanding stocks, bonds and the markets.
- Complete understanding of which money managers have been consistently successful
- Avid market enthusiast
- Overwhelming desire to help the small investor.
They told me I was also likeable and personable, so I was shortlisted and was in competition with someone who had the following qualifications:
- Furniture Sales.
He was also very likeable and personable, but from my conversations with him in the lobby, he didn't have any of the educational experience, or knowledge of what a 'stock' was.
Guess which one they picked? That's right, the furniture salesman.
They did that because he had sales experience and I didn't. And that trumped anything I had, since the bank viewed my qualifications as "trainable". In fact I think they preferred that the other applicant had little prior knowledge so they could tell him what a "good investment" was.
In my final interview, the manger had serious doubts that I would be able to push their products, since I kept answering her questions with alternate solutions. "The most successful people at this job are the ones that have the ability to move the paper in front of the customer and get them to sign."
True story.
So it is therefore literally impossible to impose any sort of fiduciary standard on a person who's job it is to push products and hit sales targets. It's logistically futile. The system has to be completely redone. Removing the commission incentive might help, but the system of sales is so ingrained in the industry that it has to be completely changed in order to help any investor.
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Thanks Ron for sharing this. You are correct - sales is definitely ingrained in our industry both in the realtors mind as well as the consumer.
Enjoy your weekend everyone!