Consumers naively believe that professional designations are the most important credentials an insurance advisor can have: Chartered Life Underwriter (CLU), Chartered Financial Consultant (ChFC), or Certified Financial Planner (CFP). Granted, credentials mean the advisor has a reasonable head on his shoulders and has completed a disciplined educational path.
I would submit to you that the salutary restriction of receiving no commission may be the most valuable “credential” an advisor can have. It alters the advisor’s heart which then liberates the head from the tunnel vision of seeing only those solutions that pay him a commission. It thus opens up a whole new (often commission-less) world. These solutions are typically unfamiliar to insurance reps who know only one way to get paid– to sell a policy.
By receiving no commissions, the heart is unfettered from the undertow of self-interest, placing the advisor in the most objective posture possible. It expands his capacity to give the best advice. After all it matters little how much an advisor knows if he does not use it for the customer’s advancement.
Warren Buffet said it this way:
In looking for people to hire, you look for three qualities: integrity, intelligence and energy. And if they don’t have the first, the other two will kill you.
Consumers naturally long for someone to strive exclusively for their welfare without regard to commissions. But it’s a two way street and any healthy relationship must have mutual respect. Consumers should be willing to pay for keen insurance market insight (where to find the best insurance bargains), the ability to evaluate proposed and current policies in a way few agents can, familiarity with alternative uses of premiums dollars for investing, and the seasoned ability to put it all together the best way that comes through years of experience.
Here’s a major challenge: commissions are hidden while fees from an unbiased advisor are fully disclosed. While fees are dramatically less than commissions, some consumers choke on them primarily because they can see them. It’s the old “strain at a gnat while swallowing a camel” human tendency.
Remember, the fee-only advisor has already forsaken the most profitable path in the insurance industry: selling policies for commissions. He’s probably doing it to genuinely serve others. So as a consumer, demand a good track record, a long list of satisfied clients, and then be willing to pay a fair wage, remembering that you should get it back (multiple times) through the on-going savings he will help you achieve. The fee is one time; the savings is ongoing.