Jennifer McLaughlin wrote a feature for the Compliance Check section of the December 2001 issue of Advisor’s Edge magazine about “rogue advisors” and their impact on the industry.
Regulatory associations were contemplating making it mandatory for dealer firms to report complaints to the associations, and publicly document any disciplinary actions against financial advisors.
The article noted that for advisors, unfortunately, emphasis is placed more upon performance (which we know is based on Unmet Needs and the motivation to get them met from the outside) than on superb service (which we know is based on values and the inspiration to express them from the inside).
Individuals who perform well can be given a great deal of slack, and that may lead to temptation to act in questionable ways. This rogue behavior is always an expression of Unmet Needs, most likely for recognition, achievement, approval, control, respect and/or security.
The strong motivation to get these needs met can lead to compliance problems and conflict of interest. Integrity and service take a back seat to praise and sales.
Financial advisors have a responsibility to provide their clients with recommendations only for investments that are suitable for them. An Unmet Need for approval, though, overrides or dominates the financial advisor’s judgment. If an advisor has a personal interest in a certain area, such as tech stocks, he may subconsciously or even consciously try to sway all of his clients to purchase these products so he can live out his self-perception as an expert and get the approval and accolades he is craving.
It takes time and effort to keep up with current regulations and keep track of changes to your clients’ status. If an advisor is dealing with an insatiable Unmet Need for achievement, he may act first and check later, and compliance problems occur.
One of the biggest mistakes a financial advisor can make is to assume that because a client talks aggressively about investments, that he actually is aggressive. The client may be expressing his own Unmet Needs of security with this aggressive language. If a client is making quick decisions that you think are wrong, consider parting ways.
When you and your client disagree about the best action, watch out for your Unmet Need for control. It can lead to rogue behavior such as signing on behalf of your client or filling in forms without the client being present. It’s not about whether your way is right or better. It’s about working with integrity, complying with industry regulations and providing the superb customer service that will grow your business.
Only an advisor who has conquered his Unmet Needs can have the courage to let a client go when it’s not working out and be professional enough to always comply with industry regulations.
This article was originally published in Curing The Unmet Needs Disease © Simon Reilly 2008
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