Presume, like me, you looking to buy a new car.
I prefer Toyotas.
Why? They do the job I need.
They are reliable. They are everywhere. My twenty-something kids will be safe in them, they can't do too much damage to them, parts are not ridiculously priced, and they can be serviced by most garages.
Now presume you're an investor.
You're seeking solid long term returns, without significant risk or fees, in a efficient structures with minimal surprises.
Best Product or Service Professionals
Ok, in both these scenarios - cars and investments - any advice or expertise needed when purchasing will probably come from a professional - a "best product or service professional".
They know their products. Usually really well.
They are technically trained, qualified and once they understand what we're after, they advise accordingly.
"Best product or service professionals" usually get paid once you decide to proceed with the job or purchase. How they are paid varies as proportion of the amount of time or percentage of purchase amount or possibly some sort of dollar fee or job charge.
It's not how they are paid that determines if they are professional or not.
Despite what some might say, most of us would regard these purchases as professional because for vast majority of times, the person selling the car, or the investment, is acting in our best interests in relation to the purchase of the product being sought.
Good salespeople or service providers, regardless of background, are those that prove to us they are acting in our best interests as we decide to buy the product or service they are experts in.
Knee surgeons, tax specialists, Toyota salespeople, real estate agents, investment bankers, SMSF experts - are all examples of best product or service professionals.
These professionals are absolutely crucial to every day life.
Consider then, the "best interest professional".
Best Interest Professionals
We need these professionals when we don't know what specific product or forward path is best for us.
Best interest professionals are similar in many ways to best product or service professionals except their advice involves more open questions as is based upon broader aspects of your situation for it to really be in your best interests.
Also, the advice from Best Interest Professionals can't be paid for in exactly the same way as best product or service professionals.
Best Interest Professionals are paid purely on the value of their advice, regardless if a specific product or service is supplied or not. Best interest professionals usually charge a flat fee or hourly rate.
In fact, it's does not make sense to trust their advice as objective if the payment for their advice is actually based upon one of the options they present.
It would be similar to taking advice from a doctor who advice was influenced because she earned benefits if her advice was to use a particular drug because a pharmaceutical company who provide her with benefits.
It doesn't fit with the definition of 'best interests'.
Whenever there is uncertainty
When options are not clear, when choices are confusing, when certainty is lacking as to which specific service or product is required, it makes sense to seek advice from a Best Interests Professional whose speciality is comprehensive advice to provide you with your specific best forward path that is purely in your best interests.
What type of advice do you seek - one from a best product professional or from a best interest professional?
The vast majority of people in financial services are professional.
When it comes to cars, I seek out a best product professional, when it comes to financial advice, I seek out a best interests professional.
It can vary.
Just know what you're after and know who you are speaking to.
What type of professional are you seeking?
Make sense? Let me know...
About Jim Stackpool
For nearly 30 years Jim has influenced, coached, and consulted to advisory firms across Australia. As founder of Certainty Advice Group, he licenses advisory firms to the firm's professional advice standards to meet his objective of making financial advice valuable for 80% of Australians. As a consultant, author, blogger, columnist, and speaker, Jim and the firm's Certainty Advisers aim to provide a benchmark for professional advice throughout Australia. His latest book Seeking Certainty is available now.