This week we talked with Ash Toumayants, president of Strong Tower Associates in State College, Pa. Toumayants recalls how an early experience with a trusted older advisor helped him learn that he needed to always do his own research.
There’s a big emphasis on mentorship in the world of financial professionals. For the most part, listening to your elders can be a great way to learn how the ins and outs of the financial planning world work. But an experience I had early on in my career also taught me it’s important to choose your mentors wisely, and to take their advice with a grain of salt. This incident happened during the first six months of my career. I considered the owner and manager of the company to be my mentor; he taught me everything I knew in order to be able to help my clients, and whenever I had an issue or a problem I’d bring it straight to him for advice.
One day, I met with an older couple who told me they had some assets they didn’t need and weren’t making use of. They said their goal was to pass this money on to their two adult children. I took this information back to my mentor and asked his opinion on the best way to help these clients. He ran the numbers quickly and told me they looked like a great case for life insurance, and that I should recommend they take the money from their assets and use them to purchase a whole life insurance contract. That way, he explained, they’d be able to pass the money on to their children tax-free. As he explained it, it made sense. I made the recommendation to the clients, who seemed pleased and implemented it — which resulted in the firm getting a pretty big commission check. All in all, it seemed like a lot of money for not a whole lot of effort.
But a year or so later I went to a training event and learned about various other types of life insurance. I realized there were other ways to approach the problem, and that if I had recommended a different, slightly more complicated route (say, a second-to-die life insurance contract), I could have generated more value for the clients’ children. From a wealth transfer standpoint, it could have been a much better option. I hadn’t even been aware of that product offering at the time but I knew enough to know that my mentor must’ve known about it. My guess was that he recommended the whole life contract because it was easy to implement and resulted in a quick paycheck. There just wasn’t enough incentive for him to take the time to ask how I could give the clients the best possible solution.
I later learned that whole life insurance wasn’t a bad choice for these clients after all; they were in poor health, and the other avenues I could have explored with them would probably have been dead ends. But I wish I had known about these other possibilities when I made my recommendation, and at least had taken the time to explore them.
I was grateful to have gone through this experience early in my career. It made me realize I have to be very careful about who I listen to — and also that I have to take it upon myself to do the legwork and make sure I have all the information. I need to work hard to know everything I can about the marketplace, the industry, and the products that are out there. It’s not enough to just listen to somebody else’s opinion, no matter how long they’ve been in the business or what their level of expertise is.
This is particularly true if the person you’re getting advice from stands to benefit financially from the advice they’re giving you. Learning from a mentor is one of the best ways to glean information about the business, but you have to be vigilant in parsing what’s financially beneficial to the company versus what is financially beneficial to the clients.