Top 100 Financial Companies

There are no top financial services companies. There are only top financial advisors. That’s because companies don’t provide financial advice, professionals do. It’s the advisor who knows you and your circumstances, concerns, and goals. It’s the advisor who develops strategies that you’ll follow to achieve your financial goals. It’s s the advisor who communicates with you and keeps you up-to-date on your progress. And, it’s the advisor you call when you want to talk about concerns, problems, or changes.

There are five core reasons why there are no top companies.

1. Track Records

Money managers, for example mutual fund families, have track records. Financial service companies and advisors don’t have track records. That’s because they are distributors of products that are managed by others. Plus, unlike mutual fund managers, their advice and recommendations vary by client. Given these realities, it’s virtually impossible to develop track records for advisors much less for companies that may employ thousands of them.

In the absence of track records how can the media determine which companies belong on their top 100 lists? In particular when there are thousands of companies providing similar services and advice with no documented results.

2. Range in Advisor Quality

Another reason why companies can’t be rated is the substantial variation in the quality of advice by professional. If a company employs or licenses thousands of advisors, some give good advice and some give bad advice. No one is looking at the average advice that’s provided by professionals at the companies. That’s because quality of advice is impacted by too many advisor variables:

• Years of experience
• Education
• Certifications
• Licensing & Registrations
• Ethics
• Business Practices
• Products & Services

3. Marketing Messages

In the absence of track records that document results, financial services companies are free to make claims that help them sell investment products and services. For example, they can claim they produce exceptional results for existing clients because they know you have no way of determining their real results. Neither can the media.

4. Asset-Based Lists

In the absence of track records most publications create Top 100 lists based on companies that control the most assets. They must assume companies that control large amounts of assets provide superior services. Nothing could be further from the truth. Most financial services firms that control large amounts of assets have huge sales forces, for example 10,000 advisors, that sell their products and services. Plus, they are skilled at advertising and marketing so they tell investors what they want to hear.

5. Conflicts of Interest

In the absence of track records and other objective criteria, media can put just about any company on their lists. It’s no accident that many of the listed companies are brand name firms that advertise in the media’s publications.

The Lists

Newspapers, magazines, and websites publish Top 100 lists to sell their products and create traffic for their websites. They know investors like lists because they believe it simplifies their search for the right company and advisor. However:

• Lists don’t mean reporters and editors have special insight that helps them determine the quality of advisory firms.
• The media uses simplified methods for developing lists that mislead consumers.

Who Belongs on the Top 100 Lists?

The real Top 100 should list financial advisors based on their ability to help investors achieve financial goals for lower amounts of risk. But, there’s no way to measure the relative quality of their advice or results. Consequently, there are no meaningful lists for advisors that are based on objective criteria. So you’ll have to live with lists that are manufactured by the media. You just don’t want to take them too seriously.