Politicians always make promises they will never keep. What else is new? As the noted Finnish architect Eliel Saarinen once said, "Promises and pie crusts are made to be broken."
But even though no one is surprised when politicians break their promises, it's still unfortunate, because broken promises breed jaded citizens. When a country's citizens become jaded, they lose faith in their future. And that's not a good thing.
In much the same fashion, the issue of promises made and kept is important in our own business. For example, insurance policies bind insurers to provide benefits in return for the payment of premiums. Financial guarantee associations and the FDIC promise to make consumers whole if their insurer or bank goes bust.
Although at a macro level, our industry has a good record of keeping its promises, individual advisors sometimes impersonate politicians and make promises they have no business making. A classic case is when they project unrealistic or deceptive performance results. Recently, Business Week
shined a spotlight on what it calls "401(k) predators." These advisors put on seminars for corporate employees on how to retire early using their existing 401(k) savings. Problem is, to lure clients, they project unrealistic investment returns (14 percent in one case) and promote aggressive withdrawals from 401(k) accounts. Can't you just see the approaching train wreck?
I can never understand why advisors use unrealistic projections. Since investment asset classes all have a range of reasonable and expected results, which most clients accept, why jeopardize your business by projecting results that teeter on the leading (bleeding?) edge of the bell curve?
Another type of broken promise is when you fail to follow through on commitments you made as a financial professional. These are the promises contained in the National Ethics Bureau's Ethics Pledge -- things such as doing comprehensive fact-finding before recommending a solution, fully disclosing your background and product details, and providing ongoing service reviews.
Not following through on these fundamentals can be as damaging as hyping results. That's because clients feel let down when their advisor says one thing during the sales process and behaves differently afterward. This disconnect, much like a politician's broken promises, generates ill will and encourages client defections.
As financial advisors, keeping promises is fundamental to your success. Here are some techniques that might help you:
1. Never promise something you can't deliver.
2. Always under-promise and over-deliver.
3. View your client promises as a sacred trust.
4. Become better organized so you don't forget the promises you made.
Remember: If you can do these basic things, you will develop a reputation for being an advisor of integrity -- someone whose word outlives the average political promise and piecrust.