I'm a financial advisor with almost 30 years of industry experience and I want to share with all of you the one question that could improve clients' outcomes with their financial advisor.
Here it is:
"What role do you see me playing in your financial life?"
So simple, right? Maybe even so simple that it mocks the highly specialized advice we financial advisors offer to you, our clients? I don't think so. Clients want solutions to their future financial challenges. Period. Some solutions really do take a great deal of sophistication to deliver, but many don't. And with financial software becoming more robust by the day, delivering solutions for complex financial challenges is becoming both easier and faster. The financial advisors who are both relatable and who are tech savvy are the advisors of the future - that's my belief, anyway. The twist in this is that the median age of advisors is about 50 years of age, with nearly half over 55. This is just the time when the industry could use young, tech savvy, people persons.
Don't get me wrong! Please don't hit the reply button to yell at me because you think I've just committed some form of age discrimination. People are living longer, healthier lives and that includes financial advisors, so that's great. Also, the financial professionals serving the public have more experience than ever, which I believe is the best thing the industry has going for it. The 50+ year old advisors have a massive amount of education that they can, and should, impart to their younger advisor brethren. Clients want their advisor to have lots of experience. After many years of working with a diverse clientele through countless situations, today's advisors have seen and done it all.
Back to that question above, "What role do you see me playing in your financial life?" It's important for me to ask this because I want my client relationships to be long term. If a prospect sees my role as something that I'm not willing or capable of filling, it gives me an early opportunity to bow out of the conversation before ill will enters the picture - which it will if there is a financial advisor/client mismatch. It really is simple, but so effective. If every advisor asked this - and was willing to believe that for all the mismatched clients he or she would turn away, new and better matched ones would take their place - imagine how much more satisfying their client relationships would be and how much more effectively they could serve clients. As a client, imagine how much better off you would be by being served by the right advisor for your situation? Not to say this isn't the case for you; just to say that it's either the case for some of you reading this right now or you had to go through a few financial advisors to find the right one for you.
For far too long, the financial services industry self-defined its role and shoved it down the public's throat. And now it's paying the price by letting new entrants, concepts, and strategies enter the picture. I'm talking about thousands of financial advisors like me who chose to become independent professionals, free from the constrained, controlled, and conflicted environment that defines Wall Street and its cohort of giant wirehouses. I'm also talking about the discount firms that sprung up in the '90's, like TD Ameritrade and E*TRADE. And now the public has more DIY choices like Betterment, Wealthfront, and Robin Hood. There are more, but these are the ones that created TOMA (top of mind awareness). If the financial services industry had done a better job as a steward of the public's assets and trust, none of these new entrants would have come into existence. The old choices were severely lacking, were created for a generation (sorry, baby boomers) that's accustomed to being told what they want (why else would they have embraced KRAFT mac n' cheese, Budweiser beer, Philip Morris cigarettes, and McDonald's hamburgers?), and can't prove their value to Gen X'ers and millennials.
But these new entrants aren't perfect replacements, not by a long shot. They are simply new tools that have yet to prove that they are helping the public make better financial decisions. People still buy high, sell low, chase fads (hello crypto!), over concentrate, over trade, and somehow were sold a bill of goods that doing 600 trades in their online account for a reduced commission rate is somehow in their best interest (spoiler - it isn't). I mentioned Budweiser beer above. Maybe these new fintech entrants are like the craft beers of the financial services industry?
But I digress. The worst thing is that the new entrants can't ask the question we started with and empathetically understand you, while the old line wirehouses are too busy offering you products and services that most of us will never need (seriously, who needs to use derivatives to lock in the present value of their South African Rand contracts against Japanese Yen?) and are just plain old shoving credit card offers and checking accounts up you're a$$ whether you approved or not (did you think we'd forget, Wells Fargo?).
It's a tough call to envision what the financial services industry will look like in another 10 years. I'm sure we'll mostly recognize it. I'm sure we'll see another investment fad gone bad, another scandal, another bear market, another crash, new algorithms, new regulations, etc. But make no mistake, the industry is better today, just days ahead of the 10 year anniversary of the last bear market low on Mach 9, 2009, than it has ever been. There are experienced financial advisors who are excited - no, eager - to put their experience to work for you. But I hope investors gravitate to the ones who start the conversation off by asking you "What role do you see me playing in your financial life?"
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