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Conflicted Rankings 

We all like to know who are the real up-and-comers in our profession, the younger career financial planners who are exhibiting strong professional leadership skills and extraordinary talents.  Every so often one or the other of the professional magazines will give us a ’40 under 40’ list of candidates to watch for in the future, and I have to admit that I can’t resist looking at the list.  

And it turns out that all of the future leaders of the financial planning profession are wirehouse brokers.

Wait; what?!?

I no longer summarize the articles in Financial Planning magazine, because I concluded some time back that professional financial planners would be wasting their time with its generally irrelevant content.  But the magazine keeps sending issues to me.  So, in the spirit of fairness, thinking that I might resume coverage of a publication that I once edited, I looked over the March issue.

Most of it was pretty much what I expected.  I hadn’t realized that baseball legend Jackie Robinson once ran a banking institution (cover story) but I fail to see how that relates to the management of a financial planning firm or improves the profession’s collective understanding of client service.

But then a “Top 40 Under 40” article caught my eye. I was curious to see who the magazine had found among the thousands of younger professionals that deserved our attention, and discovered, to my surprise, that the entire future of the profession is currently working at brokerage firms.  

Lest you think I’m exaggerating, I’ve listed below the brokerage affiliation of every single person on the list, identified by their rankings, rather than by name:

Merrill Lynch: (#s 2, 3, 4, 6, 7, 8, 14, 15, 20, 21, 22, 23, 25, 28, 31, 32, 35, 37)

UBS: (#s 5, 9, 19, 26, 27, 29, 30, 38)

Morgan Stanley: (#s 1, 10, 12, 17, 18)

J.P. Morgan: (#s 11, 16, 24, 

  William Blair: (#s 13, 40)

RBC: (# 33) 

Ameriprise: (# 34)

Oppenheimer & Co.: (# 39)

Janney Montgomery Scott (# 36)

As I looked over the list, I wondered whether it is really possible that none of the young talent in the financial services profession resides in any of the thousands of independent planning firms.  Or is it possible that the Financial Planning editors don’t see the planning profession at all?  

This actually touches on one of my nerves—something I’ve written about a few times, about how the brokerage industry has captured segments of the press using the weight of its collective marketing budgets to dictate how articles will be written.  Lest you think this doesn’t have a real-world impact, consider Barron’s ‘Top 100’ financial advisors, who are part of a search tool for the ‘top’ advisory firm to work with.  Prospective financial planning clients would turn to the Wall Street Journal’s sister publication, looking for an advisor who would help them navigate their financial lives, and find a list, from top to bottom, that looks like this: 

Morgan Stanley brokers: (1, 2, 3, 5, 6, 8, 10, 12, 13, 14, 18, 23, 25, 26, 29, 34, 35, 36,  44, 46, 48, 55, 58, 64, 66, 69, 72, 73, 79, 82, 88, 89, 91, 94, 95, 96, 98, 99)

Merrill Lynch brokers: (7, 20, 31, 32, 33, 39, 45, 51, 54, 57, 60, 63, 71, 75, 78, 80, 81, 87, 90)

UBS brokers: (9, 16, 19, 27, 28, 37, 43, 47, 52, 59, 62, 85, 92)

William Blair reps:  (11, 17, 61, 97)

J.P. Morgan Wealth Management reps: (38, 40, 83, 84)

Several of the rest are Neuberger Berman employees; there’s one Wells Fargo broker and First Republic reps are scattered here and there.  If the professional financial planner is perusing the list, looking for a familiar name, well, there’s a couple of Ameriprise reps thrown in the mix (#s 21, 24 and 100).  

If you read these publications, you might find yourself questioning whether the independent, fiduciary, fee-compensated financial planning profession actually exists—and at the very least, one would come away with the impression that—as Sallie Krawcheck once remarked after taking a senior position at Merrill—it might be just too darned risky to trust your financial future to one of those tiny little firms when you could be learning really keen investment ideas from a ‘top’ sales agent at one of the giant wirehouses.  

Moreover, it confers credibility with a naive public whenever a brokerage rep can put, on his/her online profile, that he/she was selected by Financial Planning Magazine as a ‘top’ 40 under 40 up and coming professional.  It matters that a sales rep at a Merrill Lynch or Morgan Stanley branch office can advertise that he/she is one of the ‘top’ 100 financial advisors in the country.  You and I would take something like that with a grain of salt, but a consumer would likely be influenced by these impressive credentials—which, I suspect, were actually dictated to the respective publications by their brokerage overlords.  (Make sure these 38 brokers make your top 100 list…

This cozy relationship between Wall Street and the financial (now trade) press creates a very swift current that real professionals have to swim against in their efforts to win clients and provide them with unbiased service.  The real professionals are inexorably, swimming upstream against the publicity coming from the captured press.  But I have to say that it’s discouraging that one of our own, a publication that is actually NAMED ‘Financial Planning,’ that was created to support a profession that was bravely breaking away from the client-unfriendly brokerage model to enact a revolution for unbiased, unconflicted advice, has been pulled into throwing its full support behind the brokerage industry.