I have been interviewed by thousands of advisors over the years. Not one firm has proactively asked us to explain ALL sources of our revenue. I thought it odd as we live in an industry that believes in full disclosure and transparency.We all know that providers are crucial to the success of our industry and advisory firms. Our industry providers innovate and support the needs of advisory firms. We also know that providers need to earn revenue to stay in business and improve their services.However, it is not a coincidence that there is a rise in adoption failure in tech, new processes, and provider use. We see this all the time and believe it is related to
Advisory firms are unaware of possible conflicts of interest in advice provided
While knowledge of your provider’s multitude of revenue sources will probably NOT change the value of recommendations and services, it will help you to ‘check and balance’ ideas before implementing them. It will steer you clear of advice that might not be in your best interest. Any advice that you believe is NOT in your best interest will not get adopted. Adoption only happens when you believe you are doing the right thing for your business, clients and staff. Related: Choose a Client Portal as Wisely as Choosing Your Dog
Here are a few examples of potential conflicts you should be aware of: IT consultants can earn revenue from software companies paying them referral fees. That may cause the IT firm to recommend one software program over another. Custodians can earn revenue from vendors that pay for an exhibit booth at the custodian’s conference. That may cause the custodian to refer business to the exhibiting vendor more often than a non-exhibiting vendor. Newsletter content might promote companies they partially own or are sponsored by. And the list goes on.
It is your business right and responsibility to be an educated consumer.
Knowing a provider’s list of revenue sources helps you know if there might be a slant in the advice you are given. So start asking the question about ALL revenue sources – it will help you make better, smarter business decisions. If you seek help, don’t hesitate to click HERE to schedule a one-time Boost Call or HERE to inquire into our lean, business operations strategy services.