Advisors Are Highly Critical Of Top Financial Advisor Awards Bestowed By Consumer and Professional Magazines

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It is not uncommon for a press release or two or three to cross the wire each and every day noting for posterity and for self-promotion that this or that advisor has just been named to this or that “best” list.

Case in point is what happened today. Below are two releases that crossed the transom:

-          The Medical Economics Journal has recently named Daniel W. Wilson, CFP® and Robert T. Dignan, CFP® of CedarPoint Investment Advisors, Inc. to the 2012 List of the Best Financial Advisers for Doctors. For a third year in a row, they join an elite list of financial advisors providing the best holistic wealth management services for physicians in Wisconsin. According to Wilson, the recognition by Medical Economics is the culmination of CedarPoint’s ongoing efforts to build its business model around the idea of being a full service “Personal CFO” for clients that have too little time to properly research the strategies that their individual situations require.

-          Robert L. Omohundro, CFP of Atlanta, GA has been honored with a recognition by Atlanta Magazine in its selection of "2012 Atlanta Select Wealth Managers."

And that got me thinking. What do advisors think of these sorts of awards and the advisors who issue these chest-thumping press releases? Do they view these releases as helpful for marketing purposes? Do they think these kinds of awards speak to an advisor’s competence, or service quality, or anything that a prospect should consider when searching for an advisor or that a client should consider when deciding to stay with one? Do advisors seek out these awards?

Well, if the award is deserved, advisors seemed ok with such press releases. But in the main, almost to a person, advisors were critical of these sorts of awards.

“If an advisor/financial planner has an expertise in working with a certain type of client, such as doctors or dentists and they get recognized by that professional group I can see some value,” says Richard Salmen, CFP, CFA, EA, a senior vice president and senior advisor with GTRUST Financial Partners. “It is a third party recognition of their expertise with that niche market.

Interestingly enough, Salmen says his financial planning business partner and he each got an offer in the mail the same day to “’buy’ ourselves a recognition plaque or crystal bowl attesting to the fact that we were a ‘Top Financial Planner.’ It is sad to me that this going on because they would not be marketing this kind of fluff to us if there was not a demand.”

 Other advisors confirm that magazines see these lists as sources of revenue ever eager to appeal to the vanity and the marketing budgets of advisors. “In my experience, most of the magazines that publish top or “select” financial advisor lists do so on a pay-to-play basis,” says Eric Toya, CFP, a vice president with Trovena, LLC. “We receive many solicitations for inclusion in similar listings for a fee.”

And given that, Toya says he wouldn’t advise a prospect to place any weight on that type of “award.”

To be sure it’s understandable why financial advisors might fall for these offers to promote themselves.  “Unfortunately, in an industry that disallows testimonials, consumers are limited in the reviews or information that they can learn about a firm prior to meeting with them,” says Toya.  “Nowadays, consumers jump straight to Yelp, Rotten Tomatoes or Amazon before selecting a restaurant, movie or book.  Students even have ratemyprofessor.com to help them select their classes.  A similar site for financial advisors would reduce or eliminate the desirability of these lists.”

Like Toya and Salmen, George Papadopoulos, CPA/PFS, CFP also gets solicitations from these companies wanting to recognize him for his excellence. “I just don’t buy it,” he says. “I think it is just a way for these companies to make money and for advisors to self gloat and use this for marketing purposes to unsuspecting prospects. I steer clear from such solicitations and prospects should do too.”

Papadopoulus says that for an award to be legitimate it must have a clearly defined way to measure competence and service quality. “To do that it takes a lot of effort and money,” he says. “Therefore, to gain some legitimacy, some companies allow the convenience of having nominations for such honor. It becomes a popularity contest in most cases. If anyone wants to nominate me I could not prevent them from doing so. I definitely do not see these or lose any sleep over it; I am too busy serving my clients and keeping them happy!”

Other advisers piled on as well.

“My reaction is that this is not even a thin veil for competence,” says John P. Napolitano CFP®, CPA, PFS, MST of U.S. Wealth Management. “It is merely another PR/advertising scheme that the public may or may not believe.”

By way of background, Napolitano received last year a five-star advisor award from Boston magazine, but it was “complete BS… nothing more than another sales gimmick from the ad starved publishing industry to a group of small business owners who are generally clueless when it comes to marketing.”

This year, however, he doesn’t want anything to do with Boston magazine’s award. And the feeling might be mutual. “They probably wanted little or nothing to do with me because I didn’t buy any of the add on services/stuff that they try to sell advisors to promote the award… from use of the logo for the award to reprints and adds in the magazine itself.”