Can’t Get No Sales Satisfaction

Michael Franks |

I just got a new car. What a terrible experience.

I was looking for something cheaper since I only commute two miles. Plus, I realized that I’m just not a car guy. A few years ago I got the car I always wanted and then was like, “ehhh”. Not the big deal I had thought. Now I wanted something reliable and nice; but I was also looking for a deal.

I laid this all out upfront with the salespeople. I told them I was shopping around and comparing prices. I would not be making any decisions that day.

It was almost impossible to steer the conversation toward actual prices. I was trading in my current car, so it needed to get it appraised. When the salesperson returned, I noticed right away that he didn’t bring my keys back with him.  As he was going through the numbers, all I could think was “Am I being held hostage?” He ran all the numbers and then said that it didn’t include taxes and upfront charges. I asked what those were and he said he didn’t know. He asked me “What I thought?”  I asked for my keys.

The second place was even more of a run around. It was late Friday and I was in a time crunch. So they said” Let’s do a test drive and we can get you numbers over email”. It sounded good to me. After the test drive I asked if they could do a matrix, since I wasn’t too crazy about the trim options. If I put down X, what would each cost a month? If I put down Y, what would be the cost?  I asked if they could get me the information by Saturday. I was told I would have them in an hour and they wanted me to come back Saturday. I told them I was already committed to family time Saturday, but to send the numbers.

I didn’t get the numbers in an hour and I didn’t get them all day Saturday. What I got was an urgent call Saturday morning. The sales manager was running a “one day special” and I needed to get in there right away!  This effort to create urgency insulted me. When I said I wasn’t available did they think I was lying?  Or weren’t they listening to me?  I again asked them to send the numbers. No numbers.

As crazy as it sounds, I liked the car at the second place and they were talking about giving me over 10% more for my trade in then the first place, so I kept on dancing and we came to a deal. They were going to pay off my existing loan, and cut me a check for some cash back. So we are going through the paperwork and they keep referencing - “You’ll get a check. You’ll get a check”. As soon as I sign the last document the guy says “Congratulations on your new car. Your check will go out tomorrow.”  WHAT!?! First time the word “tomorrow” was ever uttered.

It wasn’t an enjoyable experience.  All those used car salesman jokes and stereotypes persist for a reason. I admit I don’t know much about cars, so the whole process is little intimidating. I go in very guarded and defensive.

Then I thought: is this how people feel coming to see a financial advisor?

I don’t t think about it enough from a new prospect’s side of the table. I know financial topics can be confusing and intimidating for people. I am confident I will do what I think is best for them, but how do they know that? There are also a lot of jokes and stereotypes about brokers and advisors.

I know cost is important to investors.  If I am asked what it will cost, it can be a complicated answer. I usually need to know a little bit more about the situation and what the client is looking for. But I can give them an answer. With every client, I want to make sure I am clear on how I am paid:

  • Percentage of assets under management – this is my preferred way to do business.  I typically charge 1% of asset under management each year for advisory accounts.  You invest $100,000, I’m paid $1,000.  I am an advisor and I think this puts the client and me on the same side of the table. If I call with a recommendation it is because I think it is right, not because I am getting paid more (in fact, it costs me as I need to pay LPL to make a transaction).  It benefits me to communicate frequently with my clients.  The goal is to keep the money here and see it grow.
  • Hourly – I am in a position to charge clients an hourly fee for service.   I charge $150 per hour.  This could be for planning advice such as insurance recommendations or a strategy to pay off debt and save more.   It also could be for an asset allocation or 401k review.
  • Flat fee – I like the idea of helping younger investors get started on the right path.  I have packages for new college graduates ($250) and newlyweds ($500) where I can put together a to-do list for them to help get started on a path to success.
  • Commission – I can get paid commissions on some products like individual stocks and bonds, mutual funds, insurance, and annuities. Sometimes this is the only way to go and sometimes it is the most cost effective way to go for the client.  

I am committed to being as transparent as possible on pricing. I never want a client or prospect to get frustrated as I did during the car buying saga this past week. I’m looking for more satisfied customers.