“Good Old Boys” do business with and support businesses of people they know well in social settings.
Historically, especially in the south, this is how business gets done. The first dozen years of managing my financial advisory business, I learned, “If they like you and they trust you, they will do business with you.” And it worked. Unfortunately you can hear the echo of “YTB” (yield to broker) echoing off the walls of clients paying way too much for a product they never understood.
There is a fundamental problem with “The Good Old Boy” system. Conversations with colleagues of this nature tend to scratch the surface and gravitate towards hobbies they have in common and then turn into a brief overview of product and historical performance. There is no depth, nothing in this type of conversation is beneficial, helping your wealth work towards what matters most to you.
The underlying issue with “The Good Old Boy” system is the most important questions are taken for granted. Who are you? What matters most to you? What are your dreams and fears? These things are “a given”, knowing someone for over 20 years, right?
More times than not, advisors conducting business in this way are selling products omitting some of the most relevant information, because they take for granted that you like them and you trust them and they know what’s best for you.
The days of trusting someone with your future because they are golfing buddies (or your dads or husbands golfing buddy) is not over. Here are three questions you should ask your “Good Old Boy” the next time he calls to pitch you a product.
- How is this aligned with my overall goals and how does it fit into my financial plan?
- Being transparent about all the fees involved, what am I actually paying in dollars, not percentage.
- What is my risk of loss and why do I need to take the risk?
Ethics, Empathy and Communication, the primary features of a great advisor, seem to all but disappear in the “Good Old Boy” way of doing business. It’s time for all advisors to check their ego at the door and do the work of asking the hard questions. Know your client, not their handicap.