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Clients come to financial advisors because they need help managing money and are looking for advice from a knowledgeable professional. However, not all financial advisors offer quality guidance. These common mistakes can hurt both advisors and their clients.
Talking Instead of Listening
While giving advice is the focus of a financial advisor’s job, monopolizing the conversation doesn’t give the client a chance to thoroughly explain why they’re seeking advice. Successful advisors let clients take the lead during sessions and use the principles of active listening to clarify the particulars of the wants and needs being expressed. Clients have many goals beyond simply making more money from the assets they already have. An advisor who understands these goals can make better suggestions for how to invest, when to take risks and when to be cautious.
Fearing Diversity or Risk
Some financial advisors are afraid to spread a client’s investments out into a diverse portfolio, preferring to stick with one fund or use only a handful of familiar tactics. They ignore the levels of risk that clients are willing to take and either play it safe when they shouldn’t or take leaps without looking. Balance between risk and diversity is necessary when trying to find the best opportunities for clients. Exercising good listening skills and being intimately familiar with the details of the current market allows advisors to make intelligent decisions and guide their clients toward that balance.
Being Disorganized
Advisors are business people and need to conduct themselves as such. A messy office in which it’s a challenge to find anything makes it impossible to give clients good service and projects an unprofessional image. Forgetting to return phone calls or emails tells clients that they don’t matter or that the advisor is too busy trying to juggle his or her current workload. A lack of punctuality communicates a similar message. These practices undermine the sense of trust that should exist between a client and an advisor, and clients are likely to go elsewhere for financial help.
Not Treating Couples Like Couples
Whether or not an advisor is comfortable talking to both men and women, when a couple comes in seeking financial guidance together, they need to be treated like a unit. With the majority of men and women working jobs outside the home, most couples are contributing equally to the household finances. Both parties have a vested interest in the money that’s being discussed, and both deserve to share the same knowledge of how it’s being invested and what kinds of returns to expect. Should something happen to one of them, the other needs to have a handle on their current financial state.
Poor Management of Personal or Business Finances
Everyone has money trouble now and then, which is why financial advisors are needed in the first place. However, advisors should be able to apply the principles they use with clients to their own finances. A lack of funds to keep the business running, missed tax payments, big personal credit card bills and other signs of an unbalanced financial state undermine integrity. Clients don’t want to work with an advisor who can’t keep his or her own money under control. In order to give solid guidance to others, it’s essential for advisors to clean up their own financial messes first.
Advisors who make these mistakes may lose clients due to undesirable financial outcomes or lack of trust. Correcting poor performance and brushing up on skills can help preserve a practice and restore positive relationships between advisors and their clients.
