Many clients see their insurance or investment broker as a trusted advisor who has their best interests at heart when recommending a policy – and that’s how it should be. Unfortunately, some brokers are motivated by commissions instead of their clients’ financial goals.
So, what kind of broker do you have? To find out, let’s take a look at the difference between trustworthy, client-focused brokers and commission chasers.
Don’t let commission-hungry brokers leave you broke
A lot of companies pay commissions to their salespeople – and policy providers are no exception. Commissions are a good way of motivating any sales rep, because it encourages them to go out and find clients (or get clients to come to them) but when it comes to insurance or investments there’s a fine line between motivating a broker and encouraging unethical behaviour.
For example, let’s say that your broker has the option of recommending two investment policies to you as part of your portfolio:
- The one policy offers 7% return on investment, while the other offers 11%
If the risk is roughly the same on both policies it’s obvious that the second option is better, but for some reason your broker presents the first (lower return) policy to you during your consultation.
Why would a broker recommend a policy that will bring a client lower returns? It just may be that the policy provider is paying them a higher commission.
This scenario may seem far-fetched, but it’s not far from the truth when it comes to brokers who operate purely on a commission basis.
Many clients have approached Northwood with investment portfolios that are growing far too slowly – or even shrinking – because of brokers who value their commissions more highly than their clients.
Northwood’s approach is very different – and here’s why we believe in it so much.
Why you need a client-focused financial planner
A financial planner who works for their client will always weigh up all the options before recommending a policy. Taking the client’s income, investment goals or insurance needs, and lifestyle requirements into consideration, a financial planner does much more than recommend policies – they assist clients in planning their financial path in life.
Our approach to financial planning puts the client first, as our team works to find the best policies to suit your needs. Instead of ‘selling’ policies to our clients, and relying on policy providers for our income, we charge our clients an upfront fee – we don’t accept any incentives from policy providers, which allows us to assess your options clearly and without any bias.
Recommending policies is just service we offer our clients.
Unlike traditional brokers who only specialise in insurance or investment policies, our team has specialised knowledge of accounting, tax, HR, and personal finance which allows us to serve our clients in every aspect of their financial lives.
We offer financial consulting to businesses and individuals, helping company owners, managers, and working people to increase their productivity, build wealth, and plan for the future.
To find out more about Northwood’s unique approach to financial planning, contact us today.