Our firm has no customers. We only have clients. The distinction is necessary and important.
To understand the difference, look no further than the first great satire of Wall Street, entitled Where Are the Customers’ Yachts? written decades ago by the curiously-named Fred Schwed, Jr.
From the book’s description: “The title refers to a story about a visitor to New York who admired the yachts of the bankers and brokers. Naively, he asked where all the customers’ yachts were? Of course, none of the customers could afford yachts, even though they dutifully followed the advice of their bankers and brokers.” Although written over a half century ago, little has changed since.
How do you know whether you are a client or a customer?
- A client is entitled to independent advice applied under what the law calls a fiduciary standard. A customer is merely entitled to purchase products that are ‘suitable’ for her needs.
- A client knows that her interests always come first. A customer has no right to expect that her interests will ever be placed in front of the company’s interests.
- A client knows that the advice is being delivered by a team of professionals, with the requisite background in all applicable fields (investments, tax, law, accounting). A customer only knows that her sales representative is offering what his compliance department said was ok to offer.
- A client is served by a professional who measures herself by the good work they do and the happy, long-term relationships they cultivate. It’s true that professionals want to earn a good living and many are financially successful themselves, but this is merely a benefit of their success. A customer is served by “producers” who measure their value by new assets they have gathered or trailing commissions paid. If it makes a customer feel any better, know that your producer has little or no loyalty to whichever firm they serve. Producers routinely pack up shop and move to the firm down the street. I cannot fault them for this: they are treated as mercenaries so they behave like mercenaries.
- Clients are paying good money to receive good advice. Any conflicts will be disclosed and handled above-board. A customer has no real idea what she is paying or who else has a vested interest in what she receives. Customers must tolerate company sales contests and other subtle or overt influences on employee behavior. Could anyone imagine a physician being influenced in her treatment decisions by incentives from product companies? (Um, well, actually I could.)
The age of the customer is over and the age of the client is in full swing. Given the choice, why would anyone ever choose to be a customer instead of a client?
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