What Trait Defines Top Advisors?

It’s easy to take a bow when markets are performing well, but it is a wise advisor who doesn’t forget how important regular communication is during a down market. Experienced advisors know that their job is to identify risk tolerance and investment objectives and to allocate client assets consistent with those parameters (and when markets underperform, to provide the needed discipline so that investors don’t make the much-too-often-repeated mistake of buying high and selling low).

For those few clients who will never get it, let them go. For most advisors, the best client-related decision is to know when to say no: You and the client are not a good fit, and if they weren’t happy with their last advisor (whom you know is pretty good), you are destined to be the next casualty.

When it does hit the fan, and it has at some point for all advisors, and that little voice in your head says, “I knew this would not end well,” that voice should hopefully only need to be heard once, because you have developed the discipline and confidence to walk away rather than continue a relationship that will consume a disproportionate amount of your time and energy.

Finally, the much-too-often-repeated and potentially most dangerous mistake for advisory firm leaders in the post-Madoff era is to take for granted that compliance is being adequately discharged in their firms without taking an active supervisory interest. At the end of the day, it is your firm, and the buck stops at your desk. Get involved and stay involved. Delegate does not mean abdicate. Because you are required to appoint a chief compliance officer does not mean that you, as the chief executive officer, can or should rely solely on that person. Although the CCO reports to the CEO, it is the CEO who needs to confirm that he or she has the right person for that role. As a great president once said: trust, but verify.