I’m a big believer in selling advice and implementation separately.
That doesn’t mean selling both at the same time is bad. That’s how most expert businesses are run.
But selling advice AND getting paid for execution is different than offering advice for a fixed fee.
In this article, I’ll give you two examples that demonstrate why one kind of advice provides a better experience for everyone.
I bring my dog to the vet for a checkup a few times a year. But every time I do, they consistently try to sell me on premium food, insurance, or multiple inoculations against various potential diseases.
Recently, I went to the vet to look at a rash on my dog’s chin. They correctly guessed that it might be ringworm, but he couldn’t be sure without testing.
He then asked me if I’d like to test first or try the medication and see if it works.
But before I could answer, he then said some people in similar situations simply decide to cut off the patch of skin just in case its cancer. He paused for my reply.
…that escalated quickly.
Now, I’m left with the choice to give my dog a test, some pills, or cut off a chunk of her chin.
How should I know what to do?
After experiences at multiple vets where they try to up-sell me on various things, I admit I was a little bit wary. It felt like another case of up-selling, even though I knew he was probably just tying to help.
And that’s the heart of the problem when the person advising you is also financially incentivized by the implementation of that advice. Especially when you have no idea what the right choice is.
Your guard is up.
The financial “advisor”
Another example is a time when I purchased a mutual fund from my bank. I was in my early 20’s and knew nothing about investing.
Several years later, I opened a self-directed investment account so I could manage my own money.
At that point (and no time prior) they said I could keep the same mutual fund and pay 1% less in management fees since I was no longer “under their advisement”.
But here’s the thing.
In the many years I owned and contributed to their mutual fund, not once did they give me additional guidance outside of the original consultation.
In fact, it wasn’t even a consultation to begin with. They simply asked some risk assessment questions and sold me something “suitable” for my needs. Of course, it was one of their products that earn them a management fee.
They didn’t once suggest the option of going self-directed and saving a percent on their fees (which was in the range of 30-50% of their management fees).
I’d hardly call this financial advice, but that’s what I thought I was getting. It certainly wasn’t neutral advice looking out for my best interest.
Suitability vs. fiduciary standards of advice
The reason for this experience at the bank was because they were selling a “suitability” standard of advice instead of a “fiduciary” standard.
In the financial world, a fiduciary advisor is legally bound to put their clients’ interest ahead of their own.
If they sell products to their clients, they cannot have a conflict of interest (such as a back-end commission or ongoing benefit). Or, if they do, they must disclose it.
A fiduciary must offer you the best possible advice with abundant due diligence. They take a fixed-fee, not a percent or commission for selling some financial product that pays the best.
If they do their job well, you keep working with them. If not, you go elsewhere.
But the main thing is they have no financial incentive to pick one security, fund, or any other investment. They simply must select what they believe will work best for their clients’ interest, and they have an entire world of options to choose from.
A suitability advisor, in contrast, is legally allowed to suggest investments that are simply suitable for a person’s needs. It doesn’t necessarily have to be the best solution for their objectives or profile.
They’re allowed to exclusively offer their own products, even if obviously better options are available elsewhere. Even if it means they make more in commissions from choosing one product or another. As long as they pick a suitable option for you, it’s perfectly legal.
That’s the detail that makes the two kinds of advisory experiences distinct.
To be perfectly clear
There’s nothing wrong with selling advice and implementation. It’s perfectly fine, especially if you’re genuinely acting in your clients’ best interest. I know you are.
But when you make money by implementing the advice you give—distinct from simply overseeing the implementation—it automatically puts you across the table from your clients.
You become a consultative salesperson instead of a confidante. It’s not an advocate relationship in the same way as hiring an expert friend would be.
Again, nothing wrong with that. It’s just different.
Multiply this by month-over-month strategic and technical decisions, the experience begins to matter.
I personally strive to sell advice at the fiduciary standard. I take a fixed-fee, bring in specialists to execute, and don’t mark up their time nor take a commission.
I even pay those same specialists to do work for me if I ever need something done. No back-end freebies. Strictly conflict-free.
So, whatever stage you’re at, whether freelancer or advisor, my advice is this: be a true advocate for your clients.
You’ll enjoy your work more and the money will follow, too.
And if you want to be a trusted advisor, try out the fiduciary standard.