FIVE STAR Award
Blue Water Capital Management, LLC was recently selected (again) as a FIVE STAR Best in Client Satisfaction Wealth Manager. Don't be impressed though.
Once (and sometimes twice) a year San Diego Magazine runs an issue highlighting the top financial advisors in town. The award is called the “FIVE STAR Best in Client Satisfaction Wealth Manager” for 2008, 2009, 2010, etc. It is simply an advertising program and the award is pretty much worthless. Crescendo Business Services runs the FIVE STAR program. This is how their website (www.fivestarprofessional.com) describes their program:
“Crescendo works with city and regional magazines to present the "FIVE STAR: Best in Client Satisfaction" award to professionals in many industries, and in many markets. Crescendo is proud to be working with partner publications on the FIVE STAR program. This award is limited to seven percent of all professionals within a specific industry and market area. As an independent third party, Crescendo presents the FIVE STAR award to assist consumers in selecting a service professional other consumers have indicated provides exceptional client satisfaction.”
Crescendo’s selection methodology is extremely vague. (A detailed description of their selection methodology can be found on their website). For one, the term “Wealth Manager” is defined as “any individual who helps you prepare or implement aspects of your plan”. This means that life insurance salesman, attorneys, and tax preparers can be on this list. Second, surveys are completed by consumers, magazine readers, and industry professionals, and reviewed by a “Blue Ribbon Panel” of local experts - whatever that is. Third, even the award is vague. Remember, it’s not for “Best Wealth Manager”, it’s for “Best in Client Satisfaction”. Finally, why are there so many winners? For instance, in 2008, San Diego Magazine reported 256 recipients. Really? There are 256 advisors who are “best in client satisfaction”…Gee, thanks for narrowing it down.
So, why are there so many winners? It’s plain and simple – money. Crescendo casts as big of a net as possible with the generic “Wealth Manager” moniker, weed out a few nominees, and then present hundreds of “winners” to the public. Winning recipients do not have to pay to be on the list, but just like in a phone book, they are presented with “additional advertising opportunities”. Full page ads run $4,695, half page ads run $3,195. A recipient can also buy smaller ads, article reprints, wall plaques, desk awards, postcards, and our favorite – CLIENT Satisfaction Reporting which “ensures client data is submitted to next year’s evaluation process”. An advisor can pay Crescendo $195 to survey up to 15 clients chosen by the advisor - practically ensuring they'll make the list again.
Basically, advisors are spending hundreds and thousands of dollars to promote these fake awards. San Diego Magazine runs a special advertising section to accommodate the Crescendo “awards”. Judging from all the profile ads purchased, this must be a huge money maker for both Crescendo and San Diego Magazine. Why else would they run the promotion more than once a year?
“Since the FIVE STAR Wealth Manager special advertising section appeared in the February (2008) issue of San Diego Magazine we have received positive feedback from wealth managers and readers.” (again, vague) “We have also been asked by many of the selected “FIVE STAR” wealth managers to provide additional opportunities to promote the award.” (yeah, right.) “In response to this request we have set aside an exclusive special advertising section to feature profiles in the September issue (2008) of San Diego Magazine”.
Terry’s family is was a subscriber to San Diego Magazine and was sent a survey at home. His wife filled it out (of course glowingly) and sent it in. A few weeks later, Blue Water Capital Management was named as a recipient, presented with the advertising opportunities, and then hounded by Crescendo reps once or twice a week until the promotion ended. During that time, we called Crescendo and asked how we were selected. They told us because of the glowing reviews we received. When pressed for how many reviews we received, the rep wouldn’t say, but said that even one good survey would qualify us for the award. And there you have it… only one good response is needed to make the list. And Blue Water has somehow been on the list ever since. This "award" is just a deceptive advertising campaign.
Crescendo and San Diego Magazine profit handsomely from the FIVE STAR program, and advisors feel good about themselves for winning a worthless award, but where does that leave the consumer? Consumers are under the misconception that this is a real award, and they probably trust a well-known magazine like San Diego Magazine. As a consumer, you need to be aware of these misleading advertisements. In fact, this is not the only fake award going around.
Consumers’ Research Council of America (www.consumerresearchcncl.org – yes, that’s their joke of a website) has also awarded Blue Water with inclusion in the “Guide to America’s Top Financial Planners”. Of course it also came with advertising opportunities. They say that the selection process is “based on a point value system that awards points for education, years in practice, and affiliations with professional associations and organizations”. Wow, what strict criteria! No thanks…
Media Networks, Inc. runs an award called “Registered Investment Advisors You Can Bank On”. Advisors can purchase profiles (for $2,995) in the likes of BusinessWeek, Fortune, Money, and Forbes. The key here is that they only appear in the “San Diego County Edition”, not nationwide. Their brochure literally says “This program is strictly available on a first come, first served basis”. You can’t get more pay-to play than this…
Even industry awards are misleading. Reuters, Wealth Manager Magazine, and Investment Advisor Magazine all run some sort of “Top Wealth Manager” list. Advisors on these lists are not evaluated by consumers or judged by peers. Their advisory skills are not measured at all. It is really just a measure of how much money a firm is managing. Advisory firms have the incentive to inflate their figures because some publications go by what a firm reports to them and do not double-check the numbers.
A truly unbiased "best advisor" award based on meaningful metrics does not exist.
We recommend that you be wary of any financial advisor (whether Fee-Only, Fee-Based, or Commission-Based) that promotes these type of awards. Unless they are completely ignorant, these advisors are engaging in deceptive promotion.