As a financial advisor with more than three decades of experience, I've witnessed firsthand how our industry has evolved. As I watch my son begin his career as an advisor, I find myself reflecting on the lessons I wish for him to take throughout his career. Investing has never been more accessible to the average person, but with this increased accessibility comes greater pressure on advisors. Regulatory scrutiny and fiscal standards have increased, while fee compression has put downward pressure on commissions and profit margins for firms.
Despite these challenges, the profession of financial advice is still fundamentally important to families striving for economic independence. And there are still ways to succeed in this business. Here is some advice I would offer for the next generation of financial advisors.
Meet Your Clients Where They Are At
With the proliferation of online investing resources, clients today are more knowledgeable and experienced in financial matters than when I started as a financial advisor. Clients often come to the table with a significant understanding of their financial situations, market conditions, and investment opportunities. Advisors should acknowledge and respect their clients' expertise and be prepared to engage in more sophisticated discussions.
I did not receive an education in investing until college. The younger generations of clients, though, are more informed on investments, financial strategies, and market trends. According to the 2024 Schwab Modern Wealth Survey, more than 25% of Gen Z received some formal investing education, and almost three in five people are actively investing. Increased education empowers them to make informed decisions but also means they may come to advisors with preconceived notions and specific questions. Advisors must be ready to provide clarity and value.
While some clients may need basic investing education, many will only seek advice once they’ve exhausted their own research. Advisors should be prepared to offer in-depth insights and solutions beyond what clients can find through their research. The ability to troubleshoot existing strategies can help advisors position themselves as indispensable resources.
Embrace Mundane Research
Access to investment information has never been easier, but that doesn’t mean investment research is always fun. While the accessibility has increased, sifting through data, analyzing reports and performing due diligence can be tedious. New advisors should embrace this aspect of their role, understanding that the foundational work is critical to making informed recommendations and developing robust strategies.
Clients may be excited about the idea of growing their wealth, but their enthusiasm often diminishes when faced with the detailed analysis required for sound investment decisions. Advisors must be diligent in these areas, ensuring all relevant factors are considered, even if it means diving into the less glamorous aspects of financial planning.
This level of detail and due diligence is becoming more important with the growing emphasis on fiduciary duty, which requires advisors to act in their client's best interests. Ensuring thorough research and careful analysis of recommendations is not just good practice—it's a legal and ethical necessity. Advisors must do their homework to provide advice that truly benefits their clients, reinforcing trust and maintaining compliance with regulatory standards.
Be Prepared To Work Collaboratively
Building and maintaining relationships is at the heart of financial advising. With the rise of online trading platforms and portfolio management tools, clients have more control over their investments. They are also building wealth in different ways. For instance, as of 2022, a record number of families owned a privately held business. Advisors must demonstrate their value by building strong relationships and offering personalized guidance that fits within a client's greater financial picture. A strong referral network, including connections with tax professionals, insurance agents and estate attorneys, can significantly enhance the value an advisor provides.
By fostering these relationships, young advisors can better serve their clients and position themselves for long-term success.
Embrace Continuing Education
The financial industry is evolving at an unprecedented pace. To stay relevant and provide the best advice, advisors must devote more time to understanding new regulations, financial products and market trends. Continuous learning helps advisors stay ahead of industry changes and deliver cutting-edge advice to their clients.
Pursuing additional certifications and specialized knowledge areas can set advisors apart from their peers. This enhances an advisor’s credibility and can broaden the range of services they offer to clients.
Networking and learning go hand-in-hand. Attending industry conferences, webinars and workshops provides opportunities for collaboration and continued education. These events can be valuable for gaining insights, discovering best practices and building relationships with other professionals in the industry.
Be Your Client's Champion
Being your client's champion means being an exceptional listener, asking insightful questions and understanding what your client hopes to achieve by working with you in the short term (over the next year) and long term (over the next five to 10 years). Take detailed notes and always follow up on significant life events. For instance, if they mention an upcoming trip, ask them about it the next time you meet. They will appreciate your attentiveness and care.
Understand each client's preferences regarding meeting frequency and duration. When I started in the industry, it was common for office meetings to last an hour and a half to two hours. Since the pandemic and the rise of video calls, meeting times have often shortened to 20 to 30 minutes, freeing up time but increasing the frequency of meetings. Be aware of these expectations and ensure you can meet them confidently. Remember, while investment performance is important, it is not the only aspect clients value in a financial planning relationship.
Be Proactive, Especially in Difficult Times
During my career, we have experienced significant events such as the "tech wreck," the 9/11 terrorist attacks, the credit crisis meltdown and a pandemic. The most important thing to your clients during challenging times is your availability and proactive approach. Be ready to discuss these events, offer guidance and provide reassurance to help them stay on course.
Be Authentic
Your personality will set you apart in the age of artificial intelligence and financial algorithms. Perhaps paradoxically, as AI rises, the human touch becomes increasingly valuable. Advisors should embrace their unique experiences, leveraging these qualities to build trust and rapport with clients. Authenticity can be a powerful differentiator, helping advisors stand out in a competitive field.
Being true to oneself can also provide resilience during challenging times. Authentic advisors are more likely to maintain their enthusiasm and commitment, reducing the risk of burnout. Financial advisors have chosen a rewarding, though often stressful career. By staying genuine, advisors can sustain their passion for their work and continue to provide high-quality service to their clients, even during difficult periods.
Faron Daugs is a Certified Financial Planner and wealth advisor with more than 30 years of experience. He is the founder and CEO of Harrison Wallace Financial Group