For years now, I’ve been railing about what I believe to be misleading commercials on TV from big insurance companies that talk about trust, and helping clients reach their goals. In reality, they wrap a “financial plan” in a life insurance policy and make a huge commission. This is anything but helping clients reach their goals. To protect the innocent, these are my words and I will own them: “Life insurance is not an investment.“
An interesting turn of events though recently may be giving the public a fighting chance of better understanding the overwhelming conflict of interest (more ‘my words’) these insurance agents face. The CERTIFIED FINANCIAL PLANNER Board of Standards (CFP® Board) recently passed a new code of ethics and standards of conduct for their credential-holders. I must admit, the CFP® Board is not perfect, but they are attempting to force salespeople and brokers to better inform clients if they carry the CFP® designation. BEWARE: If your insurance agent or broker do not hold the CFP® credential, these new disclosures do not apply!
Recently, Northwestern Mutual has began requiring their more than 1,000 affiliated CFP® practitioners to make abundantly clear any conflicts of interest, including informing clients via a disclosure document that they have contractual annual minimum insurance production requirements they must meet. This article from Financial Planning magazine obtained a copy of the 8 page document. Do yourself a favor – read the article – and pass it along! The general public, especially those you care about, need to begin understanding this concept. BEWARE #2: Agents of this particular insurance company are conveniently not required to provide this disclosure, only encouraged. For too long, salespeople have been leading clients into the wrong products. Anecdotally, at my wealth management firm PDS Planning, Inc., we have to unwind bad products from probably half of our new clients each year.
It’s your money. You’ve worked hard for it. Protect it by seeking advice from a real financial planner, not someone with a financial interest in you buying a product. It’s that simple.