P. A. McGavick and Associates, LLC
Transparency It Had To Come We Knew It All Along
Disclosure Disclosure DisclosureOur grandson, Andrew, is a sophomore at Washington State University. He is in a fraternity, active in college life, an excellent student….and has a presence on Facebook as his social media forum. He uses it to stay connected with his friends and family; what he posts are often an illustration of college life. I am sure you can read between the lines here; occasionally, he is pictured in an active social situation. I have urged him to be careful, the internet is the Wild West, and it is possible a posting could come back to be a factor in some future job applications. Don’t get me wrong, Andrew is a terrific student and a wonderful addition to the school (officer in the fraternity next year). It occurred to end that we are no different; with the advent of social media folding into our daily lives, we are all transparent. If you write a blog, post a political opinion, pose in a photo, it is for all to see and see forever. The age of secrecy is over; the age of transparency is now here. The astonishing growth of social media is extraordinary; it is now in virtually all aspects of our lives. It is not just social media; it is the loss of privacy, yesterday a drone flew past the back of my house along the creek, and it had a camera on it. I am sure it was a realtor looking for property, but who really knows anymore. Now we hear that the camera on our computers can watch us, and Google tracks and downloads where we are and where we have been via our smartphone. The new transparency means a power shift between customers and those trying to serve and profit from them. When your clients and prospects can see you and find you, and vice versa, the dynamics of those relationships change dramatically, providing for all kinds of possible relationship changes. Nothing could be truer than the fact that how we live and how we interact with our prospects and clients has and will continue to change. Selling insurance will never quite be the same; try and hide something from your past or a negative feature in the annuity; it isn’t possible any longer. I see the coming change in all sorts of ways; advertising comes to mind. Recently I saw an ad for an annuity that showed a return 16.1% as an annual return. Not bad, really, but with the advent of All Things Google. It is easy to determine if this is accurate or a bait and switch. Does that mean that in the future, we will have more truth in advertising? Or does it mean we will all be held to a different standard? For me, I think it is a great time to be in the annuity business. It is really a sort of sunlight shining on all of us; there are fewer and fewer shadows in which to hide. Just think of it; we have nothing to hide except the truth—no worries about clients losing money or fear of exposure of not disclosing risks. When these organizations suddenly find themselves exposed to sunlight, they quickly discover that they can no longer rely on old methods; they must respond to the new transparency or go extinct. Digital communication and information access are (quite suddenly) lifting the veil around many institutions and sources of information once shrouded in mystery. The essence of this explosive change is transparency, and the transparency will shed new light on all of us. (see link at the bottom of the article) Here is a good example: http://www.whistleblowerattorneys-blog.com/2015/04/wells-fargo-accused-of-defrauding-veterans-by-charging-excessive-loan-fees.html Wells Fargo is now facing a class-action lawsuit based on excessive fees charged in checking accounts and other bank products. Without sunlight, would this have ever been discovered? So advertising 16.1% as an annual rate of return, does that mean every year? Does that mean once in a while? Does that mean once in a “Blue Moon”? Transparency and the ability to find the truth are now the new mantra. Shouldn’t we be proud of our products just because they are guaranteed and have a rate of return that is fair and based on market conditions? Mrs. Jones asked, “Bill, how much do you think I will make on my annuity this year?” What should I answer? Should I say that the S&P 500 stock index is enjoying a nice run-up, or should I tell the truth, “Mrs. Jones, your annuity is capped at 3%? I hope we can return that to you.” Sunlight will show the truth. The new transparency is now a pure reality, and it is good for us; remember, we are the guaranteed guys. In the financial services industry, there is precious little that ought to remain secret.
Disclosure, Disclosure, Disclosure!Instead of maintaining the self-serving secrecy that has dominated our industry for so long, especially because such secrets will keep getting exposed sooner and sooner, the key to our longer-term survival will be to remake who we are and what we do to serve clients in a transparent future. I am an annuity salesman; I repeat that repeatedly not to make myself believe it but because I am proud of what I am. Shouldn’t be proud of who we are and what we sell be enough to embrace transparency? It will mean an honest appraisal of our competitor’s fees and the actual risk and reward of using their products. And, it will mean the same to us, what exactly are we selling and what are the specific benefits, not just the hope of these benefits. It will mean serving the clients’ interests far ahead of our own. It will mean more truth-telling and fewer sales pitches. It will mean actual fact-finding and understanding will far excel the next “hot” product. It might be a good lesson for our grandson; in a few years, the college days will be behind him, and might those postings on Facebook remain? I read this article and used part of it for my editorial; we seemed to be in lockstep; the more I read the opinions of Bob Seawright, the more I am assured he is one of the best writers in our industry.
P. A. McGavick and Associates, LLC
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