Out of curiosity I once joined an OVB training for financial advisors, but I concluded that there was no way to do this ethically (and make nonzero money). Long story short, your reward depends on the recommendations you give to your clients. The worse the advice, the greater the commission.
Of course no one tells you explicitly to give bad advice, but they discourage you from asking too many questions (the excuse is something like: if you keep doing this, one day you will understand), I think they won’t give you the exact formula for calculating your reward, but they give you enough hints that selling life insurance is where most of the reward comes from. (The reward for everything else is a rounding error; a service you do only so that you can plausibly say that you are not an insurance salesman.) Like, it’s okay to help people get mortgage, or even invest money in funds (note: their recommended funds always lose money, no matter which direction the economy goes)… but, you know, the really important thing is to “create a financial plan” for your client, which always includes pressing them to spend about 1⁄3 on their salary on life insurance, regardless of their circumstances. Because that is where your commission comes from.
A honest financial advisor, for starters, couldn’t be paid by commission; that’s already the opposite of alignment, because the worst products have highest commissions (basically they are paying you to help them scam people, by sharing a part of the profit), and the small commissions would result in very low hourly income for you (considering how much time would you spend talking to the client, how many clients would refuse your advice, etc.). A more honest model is to ignore the commission and just get paid by hour of consultation. There, at least you don’t have an incentive to actively give bad advice. (You still don’t have much of an incentive to give good advice, though.)
Out of curiosity I once joined an OVB training for financial advisors, but I concluded that there was no way to do this ethically (and make nonzero money). Long story short, your reward depends on the recommendations you give to your clients. The worse the advice, the greater the commission.
Of course no one tells you explicitly to give bad advice, but they discourage you from asking too many questions (the excuse is something like: if you keep doing this, one day you will understand), I think they won’t give you the exact formula for calculating your reward, but they give you enough hints that selling life insurance is where most of the reward comes from. (The reward for everything else is a rounding error; a service you do only so that you can plausibly say that you are not an insurance salesman.) Like, it’s okay to help people get mortgage, or even invest money in funds (note: their recommended funds always lose money, no matter which direction the economy goes)… but, you know, the really important thing is to “create a financial plan” for your client, which always includes pressing them to spend about 1⁄3 on their salary on life insurance, regardless of their circumstances. Because that is where your commission comes from.
A honest financial advisor, for starters, couldn’t be paid by commission; that’s already the opposite of alignment, because the worst products have highest commissions (basically they are paying you to help them scam people, by sharing a part of the profit), and the small commissions would result in very low hourly income for you (considering how much time would you spend talking to the client, how many clients would refuse your advice, etc.). A more honest model is to ignore the commission and just get paid by hour of consultation. There, at least you don’t have an incentive to actively give bad advice. (You still don’t have much of an incentive to give good advice, though.)