You can tell times are good. Many people are down on financial advisors. Hollywood often portrays lawyers, accountants, hedge fund managers and investment bankers as villains. Financial advisors are often lumped into this category. They paint a picture of people who make money off other people. After 10-plus years of a bull market, investing is portrayed as something you can do yourself. Eliminate the middleman. What now?
It’s easy for advisors to feel “down,” especially when friends and family get into the act and make disparaging remarks. Here are some things to think about.
- Most people have no idea what you actually do. Advisors are often portrayed as smiling croupiers in a casino, making money regardless if clients make money or lose money. They don’t realize you are trained. Experience counts. You seek to build long-term relationships, so you must be adding value continuously.
- You help people realize their dreams. Relationships start with financial planning. The advisor learns what’s important to the client. What do they want their money to “do”? Together you develop a plan that can act as a roadmap.
- You help keep clients on track. This includes monitoring their progress. Retirement is far off. People have short attention spans. You keep them focused, adding money when they are supposed to.
- You help keep them from making stupid mistakes. OK, you aren’t always successful. Late-night TV has lots of ads for “can’t lose” investments. Often these ads don’t tell the whole story. Friends get crazy ideas and pass them along. Some people may think vintage school lunchboxes or Star Wars toys count as an asset class. You help keep things in perspective.
- What about credit? The easiest way to make 17% is to stop paying your credit card company 17% on your revolving balance. You help clients devise strategies to pay down debt. You show them how to find lower interest credit cards. Although it’s part of financial planning, you likely don’t get paid for this service.
- You try to save them money. Sticking with credit, you likely advise them on getting mortgages. You might discuss the pros and cons of car leasing vs. outright purchase.
- You are the voice of reason. You might help with budgeting on a formal or informal basis. We live in the world of instant gratification. You might be a wet blanket, but you try to bring them back to earth when they are considering impulse purchases.
- You help them retire with dignity. A large part of retirement planning is knowing what you can afford, what you spend and how prices might rise 10, 20 or 30 years into retirement. For clients already retired, you help them keep an eye on expenses.
- Insurance is complicated. You help people in areas besides investing. You refer or bring in specialists when needed. What could be worse than paying premiums for years, then discovering coverage was inadequate when you had to make a claim?
- You help solve life’s problems. Sometimes they are opportunities or joyous occasions. They need to pay for a wedding. They just had their first child and need to start planning for their future education. You provide advice and guidance.
- You offer free advice. Sometimes a relative or friend of a friend has a dilemma. They are sent in your direction. You provide some guidance, even when you know this will not get you paid.
- You help organizations. You are involved in the community. Knowing how to invest and manage money is a skill. Organizations often tap your expertise on what to do with extra cash. Many times, you are required to be at arm’s length, not having the organization as a client. You help anyway.
- Hand holding. If the stock market went up 10% or more each year and did it in a straight line, who would need investment advice? It doesn’t. It has ups and downs. Statistical data shows the general public buys high and sells low. You keep clients focused on the long term, while listening to their concerns.
- You share the pain. Doctors don’t have your illness. Lawyers weren’t charged with your crime. As an advisor, you are usually investing in the stock market alongside your client. When your client’s assets decline in value, yours often do, too.
- Therapist and life coach. As the relationship deepens, you are often one of the first people they ask for advice. You listen and try to help them see both sides of the issue. You help them make life decisions.
- You help them keep their money. They worked hard to accumulate assets. The state and federal government wants as much as they can get, especially at death. Although you aren’t an accountant, you can help with estate planning and refer them to qualified experts.
- The missing person. Some clients call or visit on a schedule. You have a plan to be in contact with clients on a regular basis. When you don’t hear from a client or can’t reach them, it’s unlikely you say: “I’ll just do nothing.” You probably call relatives and friends. You send letters. You visit their house and ring their bell. You often keep at it until you get an answer.
Someone can’t just wake up one day and decide to sell stocks and bonds. You need to be licensed. This requires testing. You need experience (being employed by a firm) before you can sit for the exam. Once licensed, you usually earn professional certifications. You have continuing education requirements. Experience has value. The markets often run in cycles. The financial services industry is highly regulated. You are a professional.
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