STANDUP Advice: Second Opinion
Stockhouse, March 30, 2007
John J. De Goey
Advice evaluation is just a click away
The business of offering financial advice is often referred to as a “trust based” business. Unfortunately, given the relatively low levels of financial literacy in Canada, most people are ill equipped to judge the merits or reasonableness of the advice they receive. To make matters worse, whenever they go to another expert for an opinion, it almost always results in the new person offering more criticism than praise about the status quo.
How is a reasonable and fair-minded novice supposed to get truly impartial advice when everyone they approach says they have an ideal solution and that all solutions put forward previously pale in comparison? Until very recently, that’s been a difficult (perhaps even impossible) question to answer reliably.
Recently, Warren Mackenzie, author of The Unbiased Advisor, started a firm called Second Opinion Investor Services. Its web site is: www.secondopinions.ca. To hear MacKenzie tell it, there is a massive need to establish a credible place where consumers can go to get professional advice that is free from any conflict of interest. Here’s what he says: “It makes so much sense when you think of it. We consider it normal to get a second opinion on any major health issue - and this is even though the doctor has no conflict of interest. How much more sensible is it to get a second opinion on a major financial issue, particularly when the financial advisor clearly has a conflict of interest, and in some cases very little training except for sales training”.
In essence, MacKenzie and his people are happy to look at your portfolio and ask questions pertaining to your current advisor relationship in order to understand what is working well and what isn’t. At no point do they attempt to “win the account.” Indeed, the only way Second Opinion can maintain real credibility with regard to its claims of true, professional impartiality is by being able to assure the individuals and organizations that engage their services that there is no “bait and switch” motive. At Second Opinion, they do not sell investment products of any kind - instead they charge an hourly fee for their services the same way Chartered Accountants do.
As a proponent of STANDUP advice, I’ve got to say that this is the sort of approach that is not only past due, but that it’s the sort of thing that could revolutionize the way financial advice is “consumed” in Canada and throughout the world. Remember, STANDUP stands for Scientific Testing And Necessary Disclosure Underpin Professionalism. Contrast that with the kind of advisors people like MacKenzie and I are trying to do away with - SPANDEX (Sales Pitches And Non-Disclosure Eliminate excellence) advisors.
Until now, most ordinary consumers have been at a loss to reliably differentiate between STANDUP advisors and SPANDEX advisors. The people at Second Opinion can help ordinary consumers to separate the wheat from the chaff and to focus on getting good advice that truly meets their needs. This is a proud and important milestone in the evolution of financial advice giving as a bona fide professional activity. We should all feel a little bit better as a result.
John J. De Goey, CFP is a Senior Financial Advisor with Burgeonvest Securities Limited (BSL) and author of The Professional Financial Advisor II. The views expressed are not necessarily shared by BSL. www.burgeonvest.com. www.johndegoey.com.
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