3 Quick, Valuable Lessons for Advisors

The financial advice profession has plenty of complicated stories. What advisors need is tangible lessons that can be easily recalled. What we do and how we do it is rapidly changing, as is our customers’ understanding of the role of financial advice in their lives.

We recently gathered a group of 30 advisors to discuss the rapid pace at which technology and our industry are evolving and to examine the shifts in how value is being delivered to their clients. We create a lot of analogies in our industry, but after two days of lively discussion in Boston, three particularly poignant lessons emerged that all firms may want to leverage to help increase the value they bring to their end investors.

1. Stop Cleaning Teeth

John Bratschi of Seaward Management encouraged others to “run their practice like a dentist’s office.” Consider this: A dentist with 30 years of experience should not spend her time scheduling appointments or cleaning teeth, but rather putting her energy into the highest value work, like reconstructing a broken tooth. The same can be said for your most seasoned financial advisors. Bring in support resources for what you can, and let your more experienced advisors practice at the very highest end of their profession. No more cleaning teeth.

2. The Softest Side Can Be the Hardest

We’ve talked a lot this year about the importance of advisors providing value beyond money management. The advisors we spoke with are in agreement that they can bring the highest value to investors when they truly understand their life’s purpose. But how do you explain to your portfolio managers, who live and die by investment performance, that the real value is found in having those softer, “touchy-feely” conversations?

It will take some work, and some reframing of your perceptions of a successful relationship, to focus on your clients’ values rather than their valuables. Not every advisor needs to become a certified life coach — though we did hear great stories from Abbey Henderson of Abaris Financial Group who found success by doing so — but we do need to learn how to have those important conversations. Asking your clients how they would choose to spend their last days on earth can help advisors access their deep-rooted priorities, and open the door for more meaningful conversations.

3. Before You Can Become a Butterfly, You’ll Have a Bellyache

Eric Carle wrote a popular children’s story, “The Very Hungry Caterpillar,” about a little bug who eats all sorts of junk food before finally finding his ideal meal — a fresh, green leaf. The caterpillar has a bellyache from all of the food he has eaten, but after eating the leaf, he gets stronger and later emerges as a beautiful butterfly. This story was brought up to illustrate the uncomfortable period that many firms are experiencing. There is no doubt that transforming your firm is difficult. There will likely be a period of discomfort — a bellyache — as you start to redefine your value proposition and change the way your business operates. Stay the course. Find your leaf and know the end result should be worth the uneasiness.

The firms that gathered to discuss these topics ranged from registered investment advisors with three employees, to strategic acquirers and large broker-dealers. Despite the differences in how firms identified, all were encountering the same pain points in their practices. Looking ahead, we saw even more disruptive changes on the horizon, in both technology and in the expectations of next-generation investors. The value of financial advice, across all segments of advisory firms, is shifting. I encourage advisors to think about these ideas as they redefine their value proposition, business practices, and the true value of advice.

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