Next month marks my 20th anniversary working in this profession. I suppose I’m feeling a little nostalgic looking back. This post may be more of a letter to my younger self than to young advisors. Perhaps some of this advice is useful. It certainly would have been for me if I’d been a little less stubborn and willing to listen to advice from an older advisor.
Earning clients’ confidence and trust to advise on their financial nest egg takes time. You don’t need grey hair or wrinkles to earn it, although it will sometimes feel that way. I remember rejoicing on my 30th birthday. Maybe I was FINALLY old enough to be taken seriously as an advisor. You will need first-hand experience with a wide range of market environments, client personalities, and planning topics before you are ready to take the lead. The best way to get this experience is to participate in meetings with a seasoned advisor. Watch how they react to client questions and comments. View how they adapt when the conversation veers from the meeting’s agenda. These are skills that cannot be learned in books. You will stumble on your own at first, which is also part of the process. I promise you that your patience is worth that wait. Five years may seem like an eternity, but it will pass in the blink of an eye.
EQ > IQ
I studied finance because I loved the math. The time value of money and compounding returns were like magic to me. I was ready to evangelize the world with these mathematical equations. I also thought I could generate alpha with good manager screens and optimization models. Soon, I realized that my ability to relate to clients and understand their motivations would be more important than running Monte Carlo simulations. This was a bit of a shock for an introvert whose idea of hell is a networking event. Emotional intelligence is more important than intellectual intelligence for financial advisors. If you are still in school, I highly recommend taking elective courses in psychology and anthropology. Understanding what makes people tick is the most important skill you can possess to become a successful advisor,
Curiosity is Your Superpower
Learning about your clients’ lives is the most effective way to build a financial plan for them. This requires asking questions to learn what they enjoy, who matters to them, and what keeps them up at night. In order to avoid these conversations turning into awkward interrogations, it helps to be genuinely curious about people. Genuine curiosity is an advisor’s superpower. It also helps to find common ground with your clients, such as where you align with interests, values, or hobbies. This is a balancing act – between talking too much about yourself, taking the spotlight away from your client, and building the relationship by sharing who you are. Curiosity will help you turn client conversations three-dimensional, helping clients relate the numbers in a financial projection to the things that happen in everyday life.
Clear, Oftentimes Blunt Communication is Required
Financial advisors cannot control the markets, the level of interest rates, or inflation. At best, we can use imperfect knowledge to build sustainable plans for an unknown future. And if we are lucky, we can influence our clients’ behavior for the better. Sometimes, this requires delivering tough news; you’ll need to work longer, save more, or spend less to reach your goals. There is no room for ambiguity in these messages. Again, the stakes are too high. You may even lose clients by telling them the truths they do not want to hear. But this is better than letting someone spend their financial assets down to zero or bail on stocks at the bottom of a bear market, or chase last year’s high flyer in search of better returns. Get comfortable with delivering tough news, and learn how to do it as clearly and concisely as possible.
Find Comfort in Silence
I have a rule of thumb that the client should be talking 75% of the time, and I should only talk 25% of the time in all meetings. Why? Because that means I am doing a good job of listening. Listening is the key to understanding your clients’ needs. You cannot listen if you are talking, interrupting, or doing anything else that takes air time away from the client. In order to succeed, you must become comfortable with the moments of silence that will inevitably occur in meetings. These are the times when a client is thinking about your questions and formulating an answer. Let them think. Give them those precious few seconds of silence to process what you’ve said and how it relates to their plan. I know it can be incredibly difficult at first, to sit in silence with a client. Two seconds may feel like an eternity. Practice helps with the discomfort. Breathe. Let them answer. Avoid the temptation to jump in with an answer or solution. You’ll only put words in their mouth and lose the opportunity to build trust.
Take Care of Yourself
Being a financial advisor is stressful at times. The stakes are high. You’re handling the financial security of entire families, and bear markets come with regularity. This is not a job you leave at the office or when you close your computer screen. It lives in your head 24/7, at night, on holidays, and on the weekends. You will wake up in the middle of the night thinking about a client’s real estate closing tomorrow. Did you forget to send the wire to their bank? Despite building practices based on financial plans, realistic return assumptions, and armed with data to back up your investment philosophy, clients are not immune to fear and greed. To maintain your sanity and health, you will need to take care of yourself. I use a combination of physical, mental, and spiritual practices to keep myself in balance. My regime includes morning yoga sessions, breath work, and meditation, but also wine, rock concerts, and spending time with friends and family. Some of these habits are healthy for my body, others for my soul. No matter what route you choose, you’ll need to be intentional about taking care of yourself if you are in this for the long haul.
Welcome to the greatest job on Earth. Few things are more fulfilling than helping someone put a financial plan in place and then watching them succeed and accomplish their goals. The retirements, the home purchases, the formation and growth of families, the second marriages, the charitable donations, and the legacies left behind are priceless to witness firsthand. It can be a slow start, but the struggle will make your eventual success more worth it. As I look towards the next 20 years, I aim to pass on as much knowledge and wisdom as possible to the next generation of advisors.