…. and what five steps can you take to address them?
Financial advisors today face many challenges. They’re financial planners, asset managers, psychologists, and marketers, and it’s hard to manage several roles.
But, what are the top five challenges they face?
○ Managing client expectations: While managing a client’s portfolio may be one challenge, managing their expectations can be harder. Many have unrealistic expectations when it comes to investment returns, and they may not understand what the global markets mean beyond the headlines. They may also not know how investments work or how macroeconomic conditions impact some asset classes or why markets may be so volatile. They also bring their biases, preferences, fears, and expectations, whether or not those are clear. They may also expect that what’s happened before – such as Bitcoin’s big increase – can happen again, without realizing that may not be possible. So, it’s up to advisors to educate them as well as provide investment advice.
○ Staying in touch: Advisors have more ways than ever to stay in touch with their clients – but some may not do that when things are going well. They should provide a constant flow of communication to maintain a solid relationship with clients, regardless of what the markets are doing. But, this can become burdensome, particularly when portfolios are plummeting – although that is the time that they may need the most support and guidance. It’s important to share the bad news as well as the good as that can help to strengthen relationships with clients.
○ Managing information: Financial advisors have to manage a lot of information. There’s information on client plans, goals, and financial circumstances. There’s the information they must provide regulatory bodies in order to maintain the licenses. Then, there’s the information about macroeconomic conditions, political actions, and tax changes, all of which can impact their work with clients. While they’re juggling a lot of information, smart advisors will focus more on their clients’ behaviour than reacting to the latest news. They can also direct clients to reliable data sources, which can prevent misunderstandings and client missteps.
○ Emotional engagement: Many financial advisors are rational, logical, and analytical. Their professional certifications are often data-driven and computationally heavy. But, then many client decisions can be emotional, and the advisors need to be able to relate to them to retain a good working relationship. They may have to explain the emotional ramifications of investment or planning decisions, but then they may need to decide how, when, where, why, and what to tell clients and how to subsequently check in to manage their relationships.
○ Finding group support: Independent financial advisors may feel alone in their practices. Those who are struggling can connect with their professional associations, which can provide industry and practice information plus professional connections to help make the advisors’ lives a little easier.
Read More: Helping advisors avoid the risk of quiet quitting | Wealth Professional
It is a lot to balance all of these things while still monitoring clients’ plans and investments. But, here are five tips to help advisors put this all into a workable perspective.
○ Identify stressors: Each advisor will feel stress around different areas, so they should identify what is the most stressful them. It may be dealing with regulations, fee compression, shrinking margins, increasing competition, business planning, or failing to achieve certain goals. They should be honest with what’s working or not because that’s the only way to figure out what needs to be addressed.
○ Identify what can be controlled – and what can’t: When advisors have so much on their plate, they need to identify what they can control – and what you can’t. They can set goals and adjust them. They can adopt new processes or strategies to manage workflow and delegate tasks to alleviate some stress. But, there are some stressors, such as government regulations and market downturns, that an advisor cannot control. So, they should focus that what you can make a difference in and accept those areas that they can’t.
○ Plan and organize: Advisors plan for their clients, but also need to plan for their businesses. They should develop a realistic strategy and achievable goals, then reduce those to practical, implementable steps. Sometimes, just knowing they have small actions that they can regularly take to reach larger goals can alleviate some of the stress of trying to accomplish those.
○ Strive for work-life balance: It takes time and effort to define, and achieve, a balanced life, so advisors should analyze what they need to make their businesses healthy while also maintaining a healthy lifestyle. That may mean setting more realistic work goals or getting more help. It may also mean ensuring they get enough sleep, exercise regularly, eat well, and spend quality time with friends and family. It can help to schedule in time at work versus time off, but it may also mean not taking work home or turning off phones for certain evenings or the weekends, or enforcing email-free vacations. There are no hard and fast rules, so each should figure out what works for them.
Read More: For financial advisors, self-care is a professional necessity | Wealth Professional
○ Adopt a positive attitude: Life can be challenging, but embracing an “expect the best and prepare for the worst” mentality can help to ease the load. It’s realistic, but optimistic – and is an easier attitude to carry than one that is always beleaguered. Being positive also helps advisors stay motivated and hopeful, and well situated in the best frame of mind to deal with whatever comes up.
