I think most people would agree, transparency is a good thing and we need more of it. In the Federal Government, in markets, in personal and professional relationships and especially in the financial services industry.
The last 10 years would be a great case study on what can happen when there is a systemic lack of transparency. Having been on the front lines of mortgage industry since 2003, I saw firsthand the damage that was and is still being done.
Lenders and banks have certainly cleaned up their act a bit, thanks to a cleansing of the industry and the people in it. Much of it forced by industry consolidation and the many layers of federal regulation that have come down the pipe in recent years. However, while things have improved in this capacity, there is still a long ways to go.
But do we really need more of this thing called Transparency? Yes and we need it badly.
Here’s Why. We need it for the proper functioning of markets, government, capitalism, but also we need it because of consumer rights, ethical and social responsibility and we need it to prevent what happened recently in the financial and real estate markets from happening again.
The problem here is that many people, industry professionals and the general public as consumers, don’t know just how important Transparency is. If they did, they would be demanding it and business practices would have to adapt.
Most of us don’t enter a meeting with a prospective financial adviser thinking about transparency. Most people don’t read through the website and do a Yelp review check on their mortgage broker looking to see how they can really be sure they are honest and can provide a decent service.
When it comes to financial transactions we simply choose to work with whom we like and trust, or maybe someone that comes highly recommended. That’s if we’re lucky and have a personal relationship. If not, we are forced to work with someone close by, a random provider or whomever claims to provide the best deal.
For the most part this is how business is done with respect to a consumer selecting a financial professional to work with. The problem here is that all too often the end is result is any combination of a lack of results, over-paying, or a poor experience.
What is missing here is a real understanding of what transparency is and looks like in the financial services industry and the value it actually creates.
We all know what we don’t want. We (as consumers/homeowners/investors) do not want to be sold, steered, pressured, limited or taken advantage of.
But how clear is today’s consumer on what they do want?
In 2011, when I was preparing to build a mortgage company around a steadfast commitment to integrity and always putting the consumer’s interest first, I asked the question to many colleagues, clients and friends. What’s important to you when selecting a company or individual professional to work with in a financial or real estate transaction??
I got answers that didn’t surprise. Honesty, integrity, trustworthiness, execution, performance, top notch service, communication…..all good things. No surprises there. But, how do we go about getting that? Not so easy. A great salesmen can project and instill many of those things, but of course fail to deliver or completely mislead from the start.
As it turns out, what we really want……..is to be empowered. Empowered to get information, empowered to have options, empowered to understand the product or transaction, and ultimately empowered to make decisions based upon our needs and preferences.
But there’s more.
How about empowered to understand and be aware of the transaction as it moves forward? How about empowered to hold your advisor, bank, or lender accountable to follow through on what they promised?
And how do we get this empowerment? Transparency.
Merriam Webster defines Transparency as “able to be seen through” and/or “easy to notice or understand”.
In the context of the financial services industry, I define Transparency as the degree to which one can be open, honest, and pro-actively disclose full and complete information.
This whole Transparency thing is actually the opposite of traditional salesmanship. Traditional salesmanship inherently assumes the salesperson knows what is best for the customer or simply tries to steer him/her to a product. The former is problematic because many times the salesman is subjective or bias and not in the best position to offer quality objective advice, and the latter because of unethical professionals simply working to maximize earnings.
Ultimately what happens when a service provider or sales professional is transparent, is that the consumer is able to obtain all relevant information to make the right decision based upon their preferences and needs. The decision point is 3 fold, 1: Does the consumer choose to work with a certain service provider/sales professional 2: Does the transaction make sense and 3: On what terms, product, and capacity?
At the heart of this transparency (in a sales or advisory role) is both humility and respect. Humility to say, “it is not my place to decide what is right for my client. It is my job to simple provide complete information, and then possibly offer a little advice if needed.” And respect for the client and their ability to make the right decision, given full and complete information.
If you are open to share who you are as a person and company in respect to values and principles, if you are honest in telling the truth and if you work to always disclose complete information relative to the decision making process and the transaction itself, to me that is a working example of transparency.