The Affluentialist

Question: What Do Cars and Financial Advisors Have In Common

Answer: J.D. Power And Associates

J.D. Power and Associates, best known for telling us what consumers think about products, from cars to cell phones, is now extending its reach and research know-how to determine advisor satisfaction levels with their employers.

J.D. Power and Associates Reports:
Firm Performance and Organizational Support Are Primary Concerns For Financial Advisors in Volatile Marketplace

It’s a great time to see a report such as this. Why? Advisors, especially independent or independent-minded advisors, are “go-betweens” placed in the middle of a financial institution and an individual client. They are financial shock absorbers of a sort, working to align the capabilities of the financial markets (in this case, the road, unyielding and without emotion) and the client (the car hoping for the smoothest possible ride on the way to its destination).

Understanding satisfaction levels between advisors and their firms gives us an inside look at how these firms are doing in helping the individual clients reach their goals. I know many advisors and all of them want their clients to succeed. If the advisor is satisfied with their firm, it’s a good clue that their clients are satisfied, too. Or, at least, given the markets these days, they are as satisfied as they can be with the institutions they rely on to implement their financial plans.

Advisors care about other things besides just making their clients happy.  They care about having their job made easy and they care about making money. On any given day, there can be healthy competition between these three aspects of their job, but, all things being equal, it’s better to hire a happy advisor than an unhappy one. Especially now, when we have once again been reminded that no one, not even Warren Buffet, knows what’s going to happen in the markets in the short term. All you can rely on in times like these are that the firms you are connected with have integrity, communicate well and do their level best to do what they promise to do.

An advisor’s satisfaction with their firms, now measured by J.D. Power, is a useful clue in determining whether or not these institutions can live up to these expectations.

It's Class Warfare, I Think

With the Dow shooting up more than 500 points today in the wake of a ‘no’ vote on the Washington bail out bill, this is beginning to feel a little like “Who’s On First.” I can’t figure out who’s on which side and what’s going to protect us from them.

“Protect us from who?”

“The bad guys.”

“Wall Street?”

“No, Washington.”

“You mean the Democrats?”

“No, the White House.”

“Who are they protecting us from?”

“The Republicans.”

“The White house is protecting us from the Republicans?”

“Yes, along with the Democrats.”

“I’m confused. I thought you said Washington’s going to protect us from Wall Street.”

“No, Wall Street’s came roaring back today. They’ll show Washington they don’t need the taxpayer’s money.”

Let’s take a step back. For the past couple of years, some smart people have observed the absence of significant social class backlash here in America, even as the wealth gap between rich and poor increased. This theme emerged most clearly in the post-game analysis of George Bush’s easy re-election in 2004. In spite of having created tax policies that favored higher earners while real incomes dropped among the middle-class, the majority of Americans cast their vote for the “candidate of the wealthy.”

Not that W. would characterize himself as the rich man’s president. He launched something called the “ownership society” which was designed to hoist more Americans to the next rung on their personal economic ladder. In retrospect, however, it seems to have been interpreted as license for banks to drop all prudence and go on a lending bender.

Certainly borrowers shoulder blame for deciding to go into hock to the banks. After all, no one put a gun to their head and told them to join the ownership society. But, in my opinon, the lending terms for many of these new borrowers were obviously onerous and went too far in compensating the lenders for the risks they took in dealing with subprime applicants. Lawmakers and regulators could have easily created criteria and oversight to deliver fairness in this environment. It’s shameful that they didn’t. They could also do this right now in the credit card industry but they aren’t. Again, shame on them.

Now the tables have turned. As of this writing, the U.S. Congress has failed to pass any kind of a Wall Street bail out. We’ve learned that Congress, especially those in vulnerable districts, yielded to their constituents’ requests on the eve of election day and delivered a ‘no’ vote to the “Emergency Economic Stabilization Act of 2008.”  Main Street talked. Washington listened.

By sending Congress back to the drawing board on the Wall Street bail out, Main Street declared war on Wall Street and we’ve witnessed the re-awakening of class warfare. It’s not exactly the worker rebellions of the Twentieth Century but it has led to a number of angry emails and some pretty saucy talk from TV’s late night talk show hosts. Now, we’ll see how the power elite in Washington and Wall Street respond. One message from Main Street to Wall Street and Washington is clear: If this is what you meant when you called for an ‘ownership society,’ you can keep it.