Recently I came across a case in which a person came to see me. She has always suspect that her advice was not "complete" and has suspected that her agent being a tied one may not be giving her a wholistic advice. When I saw her, I found that the tied-agent did a wonderful job in fact finding and analysis. In fact, the report she did for the client probably was worth at least $1000 if a financial planning fee was charged. But there was no planning fee charged. From the conversation with my client, the tied-agent had given her quite a well balanced advice including talking about things which the tied-agent could not sell. So what’s the problem?

When I did my own analysis, I found there were a few "problems." Firstly, a product recommended which eventually was bought was a very expensive product compared with a comparable substitute. Secondly, hospitalization plan was not sold to the client (the client had to buy such a plan from another adviser) because the insurer did not have a good hospitalization benefit product. Thirdly, disability income insurance plan was also not there because the tied-agent did not carry such product. Fourthly, no wealth accumulation plan at all despite the client being interested to investment her money for retirement. No wealth accumulation was because the tied-agent’s insurer does not have a suitable platform for this purpose (e.g. without a good technology based platform, how the adviser is going to rebalance the portfolio for so many clients?) Thus, an ethical and professional tied-agent who created a wonderful plan still failed as an adviser because of the inability to execute the financial plan. What then is the use of a colorful and professional looking financial plan when it continues to be merely a plan? A plan continues to be a paper plan unless its recommendations are executed in real life. A client will never benefit from a plan as long as the execution of it is not carry out as planned.

Therefore, it is important to check that your adviser's company does not limit the adviser’s capability. Look for one that carries multiple platform and each platform having multi-vendors. This reduces the risk of your ethical adviser being crippled by external factors.

To the Ethical Tied Agent reading this blog entry, it is time to move on. Let your capability not be limited by your company. The industry is moving forward. Do not be left behind. (When I say "tied-agent" I am generically referring also to those Relationship Managers working at the banks. )

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