When and why did the sales profession become such as powerful force in America? The answer explains why most of the financial services sector focuses on this model.
The Big Change by Frederick Lewis Allen answers this and many other questions concerning American culture.
“The 1920’s saw the canonization of the salesman as the brightest hope of America.”
In the 1920’s, America produced too much of everything. Aided by the assembly line, consumer credit, and advertising, many industries elevated production by astonishing amounts.
How do we get rid of all this stuff? The answer: the salesman.
According to Allen:
“Sales quotas were imposed on young men setting out to vend their wares. Contests among salesmen – often merciless – were devised. Executives told their juniors that the day of the order taker was over; that instead of waiting for customers, they must go out and find them.”
Companies sent these sharks into a sea of bleeding swimmers with predictable results. Armed with glossy pictures and persuasive copy, they hit the streets employing manipulative forms of psychological warfare appealing to the lowest common denominator:
“The techniques of frightening the consumer into buying and of appealing to the most primitive forms of social ambition.”
Modern-day financial salespeople employ many of the same techniques which began almost a century ago.
Some of them still creepily sling products door to door! Why not go full throttle and dress in straw hats, bow-ties, and tweed suits?
Transparent information and modern technology are no match for insane human emotion regarding investing.
“If they cry, they buy.”
TIAA was outed a few months ago by The New York Times. A TIAA sales training manual contained some disturbing items.
“This page was among sales training materials used by TIAA employees to prepare them for meetings with clients. It advised the sales representatives to conduct a sequence of probes to get clients to make an investment move. Pushing clients to “Feel the Pain” was a goal.”
TIAA is not the only company doing this to sell investment products. Many insurance companies and wirehouses employ the same tactics.
We could fill dozens of posts with the nauseating details.
Keeping with the historical theme, something else became very popular during the 1920’s – the sales convention.
“Sales conventions became more plentiful and livelier… the arts of salesmanship could be stimulated by a comparison of notes on methods and procedures, conducted in an atmosphere of positively revivalist fervor for bigger and better sales.”
My friend Scott Dauenhauer points out the far too common existence of these trips which double as a vacation/reward for conflicted financial salespeople.
“Want to go to Bermuda in 2018? Just become an indexed annuity salesperson who contracts and sells enough of their products and you could be heading there in business class!”
“Perhaps you want to stay in the United States — Naples, Florida at the Ritz-Carlton was a destination for 2017.”
Manipulative sales tactics bred by perverse incentives established by a conflicted corporate culture.
Sadly, the majority of the financial services industry still follows this model.
One of the worst excesses of the Roaring Twenties is still burning brightly.
Investors need their own New Deal to limit the overproduction of unnecessary products and those who sell them.
This model is replaceable. Nature hates a vacuum.
We are prepared to fill it.
Source: The Big Change. America Transforms Itself 1900-1950, Frederick Lewis Allen