Making Recommendations is Not Only Okay,
It’s Our Responsibility
by Dave Savage
CEO, Mortgage Coach
Richard Lovell, senior planner of 1st Choice Mortgage, writes:
“I read the question from Cyrus and of course your response…I agree with you on asking great questions, LISTENING, not selling specific products, but recommending products based on the information received from the client. I take into consideration a lot of data before recommending a specific product, but with the recent increase in “mortgage planners”, I have adopted something from the financial planning world; 1) Prudency; and 2) Suitability.
[But] I would submit that we do make specific recommendations based on the answers we have received from our “great”, not good questions. I have adopted into my proactive [strategy] material from you, Jim McQuaig, Jim McMahan, Randy Luebke, Steven Marshall, Tim Braheem, Greg Frost, Kuiper, Mitchell, Union, and the list goes on.
So, shouldn’t we make recommendations considering we are to be looked upon as the expert in this field? Are they not coming to us because we are the expert in this field? Should they not be looking at us as the experts to provide them with expert advice that will help them achieve their short- and long-term financial goals through a better, smarter, safer way? Maybe I am just missing what you meant, but I believe my clients and referrals come to me for that expert advice.”
Here’s my response:
I don’t think your job is to tell the client what to do or to sell them on specific mortgage programs. However, if you have a client who doesn’t have a history of saving money, you should ADVISE them to avoid using Option ARMs. If they insist on still using a non-amortizing program, it is your responsibility to make sure they clearly understand the risks, costs and consequences of perpetual debt, especially if they don’t prepay their mortgage or don’t invest outside the mortgage program.
On the other hand, if you have a client with a solid history of saving money who also has a financial advisor with a proven track record, you would want to work with their financial advisor to advise them of strategies that might help them achieve their Freedom Point faster by saving money in a freedom account vs. simply prepaying their mortgage.
The way to position it though, is, “Here is a great strategy for you”, then highlight the benefits, costs, risks and rewards of this specific strategy and say, “but it’s your decision”. Then follow that up with questions like, “What do you like best and least about this strategy?”
In summary, the job of an expert is:
1) To have extraordinary knowledge;
2) To ask good questions and listen with an open mind;
3) To have a solid process for making informed decisions that analyze unique criteria for each client (use the Total Cost Analysis and/or Equity Repositioning Analysis reports); and
4) At the end of the day, to give your clients sound advice and recommendations with a detailed proposal clearly documenting the benefits, costs and risks of your recommendations.
Thanks, Richard, for challenging me to answer this question in more detail. If anyone else has a question about this or any other subject, please don’t hesitate to email me at dsavage@mortgagecoach.com. I personally read all my emails!