Do you like to teach?

The best financial advisors are those who like to share their acquired knowledge. I’ve always believed that the happiest clients are those who are routinely educated by their advisors. Education prepares clients for the unexpected, such as a stock market crash or an unplanned life-changing event. When clients are prepared, they worry less because they know the plan that’s in place to proactively and successfully deal with the situation and perhaps even capitalize on it.

In many ways, the desire to enlighten others comes from an excitement to inspire people to either shift their own perspective or to take action in some new direction. Some of the best motivational speakers are the most powerful teachers. They communicate ideas in ways that create emotional connections to their subject matter, enabling the audience to see themselves in the story. Likewise, as a successful financial advisor, you must find a way to identify your clients’ core values and the emotional factors that drive their financial decisions and behaviors, so that you can educate them about finances in a way that resonates with them. People who love to teach have an inherent knack for connecting with their students.

One of the greatest teachers in history, Socrates, developed a teaching method that has remained extremely effective to this day — dialog. Instead of merely presenting information and insight and hoping that your clients will absorb it, ask pertinent questions to make your teaching moments more interactive, thus improving your clients’ retention. Asking questions opens the client-advisor dynamic to healthy interaction. You discover what your clients are thinking, and they become more receptive to the facts and figures you share with them.

Are you patient and supportive?

Being a financial advisor can be frustrating and emotionally draining. You must deal not only with the daily fluctuations of the market and the constant stream of world news, good and bad, that panics markets and clients, but also with stressful life events that weigh on your clients’ emotions and drive their behaviors. After all, as an advisor, part of your job is to counsel clients and be the calm captain on the raging seas.

If you’re easily frustrated when people don’t understand what you’re trying to tell them, work on simplifying your communications. Ask questions to figure out why your clients aren’t getting it or why they’re resisting the proposed plan or recommendation. Although clients may appear to be dense or difficult, the problem is usually with the presentation or with an unexpressed objection to what you’re recommending.

Be patient with yourself and your clients. Taking time for reflection is often helpful for allowing you and your clients to step back and let the information settle in and for allowing you to think of a different way to present the information. The more patient and supportive you are in the transmission of knowledge, the better chance your clients will adopt whatever recommendation you’re making.

Patience and support also extend to emotional situations. Many times, I’ve had clients cry when describing a painful life event or memory that has shaped their perception and sensitivity. When your clients share their emotions, being connected with them and having earned their trust are good signs. Continue to earn it by showing genuine empathy.

Are you willing to advocate for your clients?

Being an advocate means you fight for someone else’s benefit — not your own. It’s an entirely selfless act. You need to be willing to step into difficult situations to protect your clients from any financial harm and, sometimes, from themselves. Here are a few examples:

• If a client has a strong impulse to make a foolhardy financial decision, do your best to talk him off the cliff.
• If a friend or relative is slowly (or quickly) bleeding your client dry, stand up to your client’s urge to give the friend or relative more money. (Rarely does giving a friend or relative large sums of money for nothing help the friend or relative, and it usually ends up destroying relationships.)
• Encourage clients to tell you about any investment opportunities they’re thinking about before investing, so you can be their sounding board. (You can’t advocate for a client if you don’t know about potential scams he’s being exposed to.)

If you’re heart’s in the right place, you’re the type of person who gives advice in the best interest of your clients, even when it generates less revenue for you. As an advocate, however, you must be willing to do even more by defending your clients and their money against external threats.

Of course, your motivation isn’t entirely selfless; you need to earn an income from the services you provide. However, charging a client for the services you provide and being his advocate isn’t mutually exclusive. Ethical professionals in nearly every field do it all the time.

Are you humble?

Humility is a job requirement for a financial advisor for two reasons:

• A client’s trust in you is an honor and a challenge. You can congratulate your client on making a good decision, but you should also let your client know that you value his trust and are committed to earning that trust by providing superior service and advice. Accept the responsibility with humility.
• You’re not infallible. Overconfidence is a sure sign that you’re on the path to a disappointing career. To maintain your humility, constantly ask yourself, “What if I’m wrong?” Also, remind yourself that your job is to deliver added value to your client and that job never ends. As long as you’ve invested yourself in a process to reveal the best solution, you can be proud of the work you’ve accomplished; just don’t think that your work is done.

Practice what you preach. As a financial advisor, you encourage your clients to live within their means and put their money to work for them. Follow this advice yourself, as well. Take a look at your credit card debt and your lifestyle. Living beyond your means may be a sign of a lack of humility and of misplaced priorities.

Are you well-connected?

If you’re planning to operate as a lone wolf, being well-connected is a sign that you have an outgoing personality required to be your own rainmaker. If you’re planning to work for a firm or team up with another financial advisor who’s talented at client acquisition, being well-connected is less important.

Charismatic financial advisors have the advantage of not only attracting new clients but also adding team members and joint-work partners to their practice to handle a greater influx of new clients. (See Chapter 20 for more about joint work.)

Being well-connected is just the first part. You also need to be passionate about your work — excited to contact, meet, discuss, and educate your network. Having a drive to engage with your network is an incredibly valuable trait to develop, especially if you’re new to the field. You may not be fully aware of your talents or where you’re lacking until you challenge yourself through interactions with colleagues.

Don’t be discouraged if you’re not well-connected or outgoing, even if the sales manager at the firm where you work tries to make you feel otherwise. Industry-wide, sales managers encourage newbie financial advisors to become social animals to ferret out new business prospects. If you love that part of the job, great, more power to you. However, if you discover that you hate it, don’t worry too much. Shift your role toward another part of the financial advisory business by partnering with a rainmaker and contributing your unique skills to achieve great synergies. (See Chapter 21 for more about the three key roles of financial advisors — minders, finders, and grinders — and how to create productive synergies.)

Are you hungry for knowledge?

Like most professions, the financial services industry is constantly evolving. The constant introduction of new technologies, regulations, and capital markets requires that financial advisors be lifelong learners. Maintaining your core competencies in an ever-changing field while growing (or just maintaining) your practice is a never ending pursuit. The good news is that you’ll never be bored in this business.

Be curious. Whenever you notice something unfamiliar in the field, ask questions such as “How does this work?,” “Why are people using this technique?,” and “How can I use this to help my clients?” A natural (or well-developed) curiosity leads you to discover more ways to add value to your clients’ lives and improve the way you operate your practice. Becoming a lifelong learner is not only empowering (especially after being in the business for 20 years or more), but it’s also a surefire way to stay humble — even if you’ve had some degree of success in your career thus far.

Making a commitment to deliver value

Consider the valuable advice moments in your own life. Maybe it was a parent giving you counsel on getting over a broken relationship or your first boss giving you pointers on how to succeed in life. Everyone has all been the beneficiaries of good advice — sometimes they’re receptive to it and sometimes not so much.

As a financial advisor, you’re prime directive is to provide your clients with sound financial advice and planning, both of which add value to their lives. Your job is to guide them to achieving the best financial outcomes possible. By accomplishing this goal, you not only secure a nice living and successful career, but most importantly gain a deep sense of self-fulfillment, purpose, and achievement.

If you’re interested in how you can create a positive impact on your clients’ lives and on how you can add value to their lives, then you’re well on your way to becoming a successful financial advisor. Make the commitment to add value, and then strive to honor that commitment daily for each and every client.

If you’re getting into the financial services business just to make a bunch of money, you’re selling yourself short. No doubt plenty of money can be made in this career, but that’s just the tip of the iceberg. Later, when you’re reflecting on your life’s purpose and how you’ve contributed to the world around you, you want to feel that you’ve had a profound positive impact on those around you and in your community.

Avoiding the siren call of commissioned sales

One of the first decisions you need to make when you’re entering this field is whether to be a financial advisor or a salesperson. Here’s the difference:

• Financial advisors improve their clients’ short- and long-term financial outcomes by providing solid financial advice and planning. Their compensation is tied to the financial success of their clients.
• Salespeople sell financial products to customers and collect a commission on each sale. Salespeople may develop long-term relationships with their customers and sell them products that are in their best interests, but that arrangement isn’t built into the transactions.

Many so-called financial advisors make their living selling products and collecting up-front commissions. In doing so, the advisor’s and customer’s interests aren’t aligned, and the time frames differ significantly. A customer buys a financial product with the hope and promise of a positive future financial outcome, but the commission rewards the salesperson immediately, so the salesperson has no vested interest in the future outcome. This misalignment is a conflict of interest that’s common in the financial services industry. The best way to align your motivation with that of your clients is to build a practice based primarily or solely on asset-based and service fees, not commissioned products.

In reality, most financial advisor practices are a combination of both fees and commissions. However, I’ve found that firms that base their compensation solely on the financial outcomes of their clients are most consistent in providing clients with advice that’s in their best interests. The most common compensation models that align advisor and client interests are asset-based fees or financial advisory fees. (See Chapter 7 for more about compensation models.)

Differentiate yourself by being open and honest with clients about how you’re compensated. Full disclosure can be a powerful way to build trust and earn new client referrals.

Embracing your leadership role

As your client’s financial advisor, you’re the quarterback of the financial team, which includes the client and may include other advisors (such as an attorney or accountant), trusted family members or friends, and, in more sophisticated households, named trustees and beneficiaries. As quarterback, you communicate with and coordinate the efforts of the other players on the financial team to optimize the client’s financial outcomes. Strong leadership is necessary to oversee and direct the many aspects and many people involved in a client’s finances.

You’re in the best position to take on the duties and responsibilities of managing the overall financial plan for a household. Attorneys are great for drafting and amending solid family governance documents and preventing your clients against monetary losses related to legal cases. An accountant is fantastic at keeping the tax liabilities optimized and managed through different techniques or structures. However, setting the family’s financial agenda is your responsibility. In this capacity, you’re considered the wealth manager, a moniker that’s been newly minted and marketed by many financial advisory firms.

Maintaining a service-oriented mindset

This profession delivers an intangible product. You can’t wrap it up with a nice bow and present it to your client. Instead, the results of your efforts are measured by your clients’ ability to live the life they’ve dreamed of — putting their kids through college, traveling and having a work-life balance, and retiring to a fulfilling and enjoyable lifestyle.

Because you’re offering an intangible product, you should develop yourself into a product of sorts. Your clients should come to expect a certain type of interaction on a given frequency, and they certainly don’t want to be sold the hot financial product du jour. (Over the years, I’ve had more than one new client hire me and fire another financial advisor, just because I had a defined client service model and because they understood that they’d be served, not sold to, on a regular basis.)