The Power of 'Best of' Lists

In the June 2010 issue of Hour Magazine, I was named one of the top wealth managers in the Detroit area. You might think that I would feel honored by the recognition, but I find it a little troubling that these types of lists carry so much weight with consumers. It’s natural to want to work with the “best of” any profession. Even so, I believe if you are serious about hiring someone to help with your financial life, you should do more than select from a simple list.

The term “wealth manager” is overused in the financial service industry. For this survey, the label means individuals who help manage your financial world and/or implement aspects of your financial strategies. Therefore, this list includes financial advisors, life insurance agents, accountants, tax advisors, and even attorneys. The Hour Magazine list of the best wealth managers is not exactly an elite group, as I shared the honor with 685 others in the area. Nevertheless, some of the best financial professionals that I know were not on the list, and unfortunately, I’m pretty sure that some of the honorees would more appropriately be shown on a worst advisors list.

To screen the candidates, a survey was conducted and background checks performed. I don’t doubt that some structure was applied, but I question the rigorousness of the process. My hunch is that someone nominated me (either a client or another professional), and at least one other person said something nice about me. I’m grateful to those folks for their kind words. Still, I think this list was more about selling goodies to the honorees, than educating the public.

I did not spend the thousands of dollars required for a personal profile advertisement to accompany the listing. In addition, I declined to spring for the decorative wall plaque ($250), jade crystal desk award ($195), or the other paraphernalia offered that trumpeted the award. In fact, I didn’t even buy the magazine as I was able to borrow a copy of the June edition.

Many advisors will take the opportunity to market this award and other similar “best of” awards. My view is that if you can’t be honest with yourself as far as putting these lists in perspective, how can you be honest with your clients?

Please note that Hour Magazine seems like a very nice publication. It might even be a great way to discover a new restaurant or hire an interior decorator. However, there are certainly better ways to find and retain a financial advisor. My advice is that in selecting an advisor, the search should entail significant due diligence.

For some direction, check out this recent article by Morningstar called Paying for Financial Advice on an A la Carte Basis. In the article, Sheryl Garrett, one of the truly best financial advisors in America, talks about how she formed a network of hourly-based fee-only advisors (Garrett Planning Network), and presents steps on how a person should go about finding a fiduciary advisor.