The Banking Industry
1. Zero Fiduciary Duty: Most investment “advisors” are really just salespeople. Their interests are conflicted because they work for companies that want to sell you more stuff. As a result, these salespeople have zero fiduciary duty to their clients. “Advisors” are not required by law to put their clients’ interests ahead of their own. In fact, clients commonly come last.
2. Expensive Fees: Without fiduciary duties, a sales-driven culture of “asset gathering” was long ago created in the investment industry. That culture continues to motivate investment salespeople to push expensive investment products rather than manage existing funds. In fact, a 2013 report from Morningstar Fund Research indicated: “Canada fails in Fees & Expenses. Among the 24 countries in this survey, Canada has the highest annual expense ratios for equity funds, the second highest for bond funds, and the highest for allocations funds.”
3. Fixed Fees: These investment products also come with fixed fees. In other words, these expensive fees are fixed at the same rate even when clients are losing money. This begs the question: are there any incentives to even try to perform?
If this continues, then we maintain investors of all sizes will find it challenging to meet their financial goals. Compromises will need to be made to offset these financial shortfalls. For retirees, this may require working longer and moderating their original retirement plans.
"Most managers have very little incentive to make the intelligent-but-with-some-chance-of-looking-like-an-idiot decision. Their personal gain/loss ratio is all too obvious. If an unconventional decision works out well, they get a pat on the back, and if it works out poorly, they get a pink slip. Failing conventionally is the route to go." – Warren Buffett
The Life Insurance Industry
1. Outdated products and offering. Most of the products offered by insurance companies are outdated and are not competitive with the offering today. "If it isn't broke, don't fix it" applies here which results in complacent Insurance companies and products that are cash cows and the client isn't the wiser
2. They only go after big fish - The insurance companies get to choose which client they get to accept so most of the insurance companies target the 1%. They make policies difficult to approve so that only the 1% has access to the policies that offer the best value. As a result, Insurance companies create bad products for the poor to gain a customer, only to raise the rates a year later.
3. Aggressive sales people - The Insurance industry has a bad reputation of aggressive sales people because some organizations structure themselves still today with a model that doesn't help their clients. They are focused on recruitment while other organizations don't bother to invest in proper marketing and sales to take care of their clients.
We Treat Our Clients’ Money Like Our Very Own™With this ambitious goal in mind, Meritocracy and Partners has aligned itself to its clients through a performance-driven fee structure and by eating its own cooking. This tangibly reinforces our fiduciary duty to place our clients’ interests ahead of our own.
MCP voluntarily chose to do business this way because it believes investors need a real alternative to the institutional imperative of conventional failure that most investment “advisors” practice. By aligning our incentives to our clients objectives, we treat our clients’ money like our very own.
Cutting out the fat. With so many outdated products, We are here only to offer the products that will return the most value and cover all of your needs. As an independent company, our reputation is worth more than any sales commission payout that an insurance company might offer