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Reiter: The leaders join to protect
themselves and their practice. They want to be around
to serve clients for the long-term. They are aware
that financial advisors are now the number one litigation
target! It is not a matter of if they get sued but
when! They are aware that the cost to settle the average
lawsuit is now over forty thousand dollars!
You can even be sued now for something you did not
do! Your obligations and your liabilities now follow
you into your retirement and old age, even after you
are no longer in business. Regulatory agencies increasingly
place you at risk.
Responsible advisors plan carefully and intelligently
for themselves and their business. Honest, responsible,
careful, and knowledgeable planners are likely to
be litigated against. This includes RFC's who
are totally dedicated to the best interest of their
clients.
What are the other options? To disappear, to be wiped-out,
to flee and hide, to go to prison, to receive huge
fines, to loose your home and business and assets,
to be emotionally destroyed. Those are not
acceptable!
What irritates Jerry Reiter?
Reiter: The arrogance of some financial
professionals. These types say they don't need
our services because they run a "clean business."
Well, I haven't seen anyone who intentionally
runs a "dirty business." Many say they
don't need membership in the Financial Advisors
Legal Association because they deal with "friends
and family."
We routinely see lawsuits against financial professionals
who have been in the business forty plus years, run
a clean business, and deal only with friends and family.
These claims come from sisters, brothers, in-laws,
close friends, and from people they would least expect
to initiate a lawsuit. Trying to convince some of
these arrogant types that they are not bullet proof
can be very irritating.
How do you invest your own money?
Reiter: With a specific plan. The old saying, "If
you fail to plan – you plan to fail" still
applies to all folks who invest today. Financial advisors
need to be very sensitive to the fact that people
are living longer. This fact alone could adversely
affect every client's future lifestyle. Recently,
I attended a convention of Doctors where the statement
was made that if you are alive today that the odds
are greater than fifty-fifty that you will outlive
your parents by more than twenty years.
If that statement proves true one can only imagine
the adverse affects this could have on retirement
planning, social security, and health care, especially
long-term care without a prudent financial plan. By
addressing these issues with my own parents it has
become blatantly apparent that length of life does
not necessarily mean quality of life. These are critical
issues that need to be addressed with respect to investment
and financial planning.
To me there is no "quick fix" with respect
to investing. I'm a proponent of a long-term
conservative investment plan that will achieve financial
security. This doesn't mean that I stay away
from risk, but I try to keep risk in perspective with
my long-term financial goals and objectives. Needless
to say, I utilize a financial planner to keep me on
track.
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You Are
Now The Number
One Target For A Lawsuit!
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Have any inspirational, motivational, or
sales improvement speakers, influenced you?
Reiter: Most such trainers are rehashing
the same ideas and techniques that a few original
trainers introduced decades ago. Today there are hundreds
of motivational trainers that have produced thousands
of books, many self-published.
When utilizing this type of training it is important
to understand that the most recent trainer does not
necessarily have better techniques in this area. With
that said, I've found some trainers stand head
and shoulders over the rest because they impart timeless
applicable knowledge. Zig Ziglar, Napoleon Hill, Lew
Nason, and Dale Carnegie are four whose ideas and
techniques still apply to all.
I required both of my sons to attend a Dale Carnegie
course because it gave them the tools and self-confidence
to publicly present their ideas. To me you can have
the best ideas, but if you are not trained to publicly
present and motivate people with your ideas, you will
find it difficult to advance in your career.
How important is it for agents and planners
to work with other financial disciplines?
Reiter: Presently it is essential for broker
dealers, tax accountants, bank trust officers, tax
lawyers, tangible investment advisors, estate administrators,
recovery lawyers, appropriate bankers, and related
specialist to work as a team coordinated by the financial
planner. This is very important.
Today the financial professional will find it almost
impossible to be all things to all their clients.
It's important to establish a qualified network
of individuals who specialize in the various financial
disciplines. This approach to business frees up time
and reduces liability. Furthermore, you are doing
what's right for the client. You may have to
share the wealth, but I've discovered that professional
relationships of this type are much more beneficial
financially.
What do you like most about the planners you
work with?
Reiter: Besides their tremendous work ethic,
discipline, and sense of humor, it would be their
intelligence. I continually learn something from the
people I work with. I'm proud to be surrounded
by individuals who are striving for the same cause
and can contribute to this cause in areas where I
am less capable. I also admire their dedication to
their client's best interest.
What do you think the future will bring for
financial planners and insurance agents?
Successful Planners Get Sued!
Reiter: More litigation, but also
more opportunity. Successful people get sued. Financial
professionals include many successful people. Thus
they attract litigation! This goes with the turf!
However for those that are prepared and ready for
battle the spoils are many.
Do you see opportunities for planners as a
result of evolving technology?
Reiter: Most certainly! Technology today
has freed up time and money once expended for administration
and related mundane tasks. Time is our most valuable
commodity and technological advancements have freed
up more time to be more productive, not only in business,
but in our personal lives as well.
Many financial professionals now are attending educational
seminars via the web where as before they would have
been forced to fly to a destination and waste valuable
money and time attending the same seminar. Technology
will continue to embolden us with more time to spend
on how we see fit and to be continually more and more
productive.
The client has changed from having a personality to
being evaluated on actuarial numbers. This opens a
huge opportunity for financial professionals to fill
this gap. I believe in high tech, but I also believe
in high touch. Many people today feel out of touch
– unimportant -- or just a number.
Large institutions will always struggle with the difficult
task of commoditizing their business and also maintaining
high touch with their customers. This is an area financial
professionals can fill through a partnership arrangement
to their mutual benefit.
Do you see any special opportunities in the coming
economy?
Reiter: Over the next decade we will
experience change that will surpass the last fifty
years. For those prepared this change will create
many opportunities. For example, I predict major changes
in social security, foreign currencies, and longevity
through medical breakthroughs, communication technology,
accounting rules, and taxation. These changes will
create many opportunities and demand for personal
financial expertise.
Are there new options today for planners to
make changes
in their practice that will prove lucrative?
Reiter: Litigation is the number
one reason a financial professional will go out of
business or bankrupt! To me there is nothing more
lucrative than keeping what you've worked hard for.
The first change a financial professional needs to
make is a change in his or her mind set to be proactive
in order to prepare and protect their livelihood.
Voluntary associations have offered affordable ways
for many to take advantage of economies of scale for
this protection. Our association has proven to be
a lucrative decision for financial professionals across
our nation.
To Succeed You Can
Not Be Intimidated!
To succeed in this life you cannot be intimidated
by anyone. Everyone came into this world naked and
will leave the same way. I've been fortunate
to know and have friendships with many very successful
people only because I'm unafraid to speak with
them. I've also discovered that no matter how
successful someone is (or what league they think they're
in) they can always use at least one more friend.
I'm no exception to this rule.
To Sell More You Must
Educate Your Prospects!
Educational seminars for your prospects result in
sales to clients! Today there is information overload.
People are striving to learn more, but they feel out
of touch and confused. This can be very frustrating.
You can create more sales opportunities by first giving
a client education and then selling them a product
or service.
What is the most important advice you can give readers
about how to improve their service and sales?
Reiter: To improve your service go to www.falegal.com
and learn how to protect yourself and your practice
so you will be in business for long-term relationships
with your clients. To increase sales -- educate your
prospects! Don't always try to sell every time
you encounter a client or prospect. Be a resource
for useful information and become a mentor! In our
fast-changing environment people are realizing that
they don't know all that they should know or
understand.
Many people feel overwhelmed. Our political process
and government systems have taught many American citizens
to be suspicious. By establishing yourself as a trusted
mentor dedicated to your prospects or client's
best interest, you will solidify relationships and
receive referrals beyond your wildest dreams. Trusted
people and trusted professionals are rare today.
Has the Internet been helpful for you in marketing
FA Legal services?
Reiter: Yes. We established a Web Site from
inception of the Financial Advisors Legal Association.
Our eDefense Manager is a web-based tool to "bullet
proof" our members from groundless legal attacks
from a client. By utilizing the Internet we are able
to issue our members legislative and regulatory updates
in real time. This is extremely important in today's
business environment where a financial advisor could
be held accountable for not knowing critical information.
With the Internet we are able to keep our members
ahead of the curve with respect to knowledge management.
Our web site certainly helps us quickly explain our
benefits and service to financial planners and insurance
agents.
What are F. A. Legal's plans?
Reiter: To constantly increase benefits to
our members. As our association grows we are able
to impart more benefits without increasing membership
fees. This economy of scale is the advantage of voluntary
associations. In short, there is "power in numbers."
The E&O Hoax
What do you consider a great hoax in the insurance
or
financial planning industry?
Reiter: It's the perception that if
the financial professional has Errors and Omissions
(E&O) insurance then they are protected
from litigation and liability. This is far from reality!
Today, E&O has exclusions and
limitations that many financial professionals are
not aware of, especially with respect to legal defense.
Also, these same individuals feel that if they structure
their client base with "friends and family"
that they are immune from litigation. It's important
to note that most clients become our friends. Family
is another story. We consistently see claims filed
by friends and family members. We see claims from
sisters, spouses, children, grandchildren and in-laws.
The financial professional needs to understand that:
Money knows no friends.
Money knows no family.
After all – the Sopranos are family.
During your career, has sustaining the same sales
level become more difficult each year?
Reiter: Actually, the litigious environment
has resulted in incredible growth for our association.
We are filling a need with litigation prevention and
defense tools for financial professionals. I don't
see litigation declining anytime in the future. Financial
professionals are going to have to deal with this
problem if they want to stay in business. The association
is a solution to this problem so we anticipate compounded
growth over the next several years.
What is the biggest change you have experienced in
your specialty discipline during the last twenty years?
Reiter: The biggest change has been
the ability for lawyers to advertise. This has had,
and will continue to have, an adverse affect on the
financial industry, as well as the country. It used
to be lawyers were not allowed to advertise, but today
legal advertisements outnumber most all other forms
of advertising both in volume and expenditure.
Obviously, when you advertise something, you anticipate
that you will sell more of the product or service
you advertise. Legal services and litigation is no
exception! Lawyers are constantly advertising for
more litigation, mostly on a contingency basis. You
can chart the dramatic increase in lawsuits back to
the point when lawyers were allowed to advertise.
This advertising encompasses TV, radio, newspapers,
magazines, yellow pages, and the Internet.
Over A Million Lawyers
Are Available To Sue You!
There are now over one million web sites with lawyers
advertising for clients to sue their financial advisor.
This is a major change that has adversely affected
the financial industry making financial planners and
insurance agents the number one litigious target.
Since many of the claims against financial professionals
are groundless – tort reform would be our most
beneficial change. "Loser pays" would
inhibit the ability of clients to legally attack their
financial advisor on a contingency basis. This would
help reduce claims and hold the client, and their
lawyers, financially accountable for their groundless
actions. But, don't hold your breath…
Forrest
Wallace Cato, RFMA, FMM, RFC, is a long-time
reader of Financial Services Journal On-Line.
He provides media based image branding for financial
planners. Financial Record called
Cato, "The leader in image branding for financial
professionals." Long-time financial industry
sales trainer, Jack Kinder, proclaimed,
"Cato's impact is enormous." During the
annual IARFC Forum Convention he
presents The Cato Award for "Published
writing that promotes greater understanding for and
acceptance of financial planning." Cato is former
editor of Financial Planning
Magazine and Trusts & Estates:
The Journal of Wealth Management.
Today Cato is Editor-In-Chief of The Inspirator
International Magazine, presently circulated
in all of the Pacific-Rim countries. Contact:
Intergroup II/Atlanta, Inc., 915 River Rock
Drive, Suite 101, Woodstock, GA 30188, 770-516-9395
(Phone), wcato7@juno.com
(e-mail), 770-366-8441 (Cell)
or www.CatoMakesYouFamous.com
(Web Site) or
770-516-9396 (FAX). |
