Reputation risk and Warren Buffet

It takes 20 years to build a reputation and 5 minutes to ruin it. If you think about it, you will do things differently.

This is what Warren Buffet has to say about reputation risk. Frankly this is perhaps the most ignored aspect today in financial product sales. Most people who are looking to selling (hawking) financial products look to the manufacturer who pays the highest commission. After all, we are all driven by quarterly earnings.

My take is – if a financial company (distribution company) is catering to the masses, it should chose brands with good image and reach. Even if the commission is lower, they can earn higher amounts. However if the distributor is catering to the higher end customer, they could choose more expensive products (sic).

Sounds corny, but 50% of ZERO is still ZERO. But if your lower end sales person can sell (push) a well known brand, there is a greater chance of some closure. Think about it. Listen to Warren, especially those of you guys who have a good reputation to protect.

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