Paul Meloan – Vested Interest

Over a decade ago, my former partner and I would be invited twice a year to a fancy luncheon, held at a fancy hotel, organized by a local insurance brokerage.  Everyone who works in finance in Washington, DC would know the firm, but its identity is insignificant.  The food was lovely, the parking comp’d, and they usually invited some very serious speaker to impart great wisdom to the assembled audience (persons believed to be capable of influencing potential customers of said firm to purchase very expensive and complex life insurance products).  After two hours of glad-handing and schmoozing, we would depart the hotel to await the inevitable arrival of the afternoon food-coma the event would induce.

This pattern persisted for a couple of years, at which point the invitations stopped.  While my partner did a much better job of schmoozing than I ever could, I suspect it was not my reduced social skills that got me uninvited. My partner was uninvited also.  No, it was something far more important that left us to fend for our own mid-day meals, and to find other ways to feel self-important.

None of our clients ever went to this firm to buy very expensive and complex life insurance products.

I hope they didn’t think we were just playing the field: our clients didn’t buy very expensive and complex life insurance products anywhere else either.

The financial services world is awash in free lunches, which of course are never really free for long.  Same goes for baseball tickets, trips, junkets, boondoggles, whatever you want to call them.  Many “advisors” believe in the have-portfolio, will-travel school of relationships with product reps and wholesalers.

What’s always stunned me is not that advisors would sell their independence and objectivity (doctors perfected that move decades ago) but that they would sell it so damn cheap.  If I sold insurance, and I needed to buy $1000 worth of beef tenderloin and comp’d parking to get a shot at earning a $250,000 insurance commission, hell yes I would.  But the good news is that I don’t sell insurance, or any other product.  I don’t have to purchase them (or recommend them) either.

So when it comes to a Nats games or lunch, if you’re a client, my friend, or even my wife (hi hon!) I will be the one buying.  Except if you’re my dad: he always buys when we get lunch (thanks, Dad).

Paul Meloan is the co-founder and co-managing member of Aegis Wealth Management, LLC, in Bethesda, Maryland USA. Before Aegis Paul was a practicing attorney as well as working in the tax practice of Ernst & Young, LLP.

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