Each client has a different expectation from their financial advisor based on their financial goals and investment horizon. Many clients lack clarity in terms of what their financial goals are. This leads to unclear expectations from a financial advisor, who may struggle to draft the most suitable financial plan for their client. Very similar to one’s medical requirements, the financial needs of an individual may differ from person to person. Moreover, trusting an outsider with your personal financial data becomes a barrier for most people, which becomes a wall for effective communication between them and their advisors. Hence, it’s important that clients convey their requirements clearly while conversing with their advisor. So the question that arises here is: what do clients want from their financial advisor?
Investors commonly state that expertise and integrity are important factors in their financial advisor relationship. But are they enough? A client’s personal needs often rise much above these two terms. A basic term that most advisors seem to neglect is the fact that clients want their advisors to understand their individual financial and life circumstances. If you’re an investor currently managing your finances on your own, and are looking for wise investment strategies to manage and grow your finances, consider consulting a financial advisor for further guidance.
In this article, we’ll walk through the most basic qualities that clients look for in a financial advisor.
What do clients look for in a financial advisor?
1. A financial advisor that has integrity
The quality of being honest and fair defines integrity. It’s the most common and basic quality listed in almost every financial advisor’s key features or differentiators over the internet. To elaborate, it means you should never lie to your clients or try to stretch the facts for any reason. You must adhere to the fiduciary standard that places the needs of the client ahead of your own in all situations and every decision, should you be a Registered Investment Advisor or a fiduciary financial advisor.
2. A financial advisor that is competent
Right after integrity, a client wants their financial advisor to be competent – someone who has the necessary skills or expertise to handle their finances better than them, and above everything, delivers results. Clients need their financial advisors to formulate effective strategies that would minimize risk while helping the clients capture potential capital gains. They want them to give sound advice on estate planning, retirement planning, cash flow management, and budgeting, and be aware and experienced with the latest developments in the market regarding insurance and risk management, business succession planning, and income tax laws.
3. A financial advisor that is accessible
Every client wants their financial advisor to be easily reachable or approachable. Is your advisor in regular touch with you? Do they keep you informed on recent market changes and suggest changes in their investment plans? Most big brokerage firms face this issue when they are expected to get as many clients as possible for additional incentives but, towards the end, they are unable to deliver optimum client satisfaction. This raises customer escalated issues.
The same is also true for smaller firms and individual financial advisors who assist retail clients. If your advisor cannot keep in touch with you in the beginning, this is a potential red flag. A sign of a good advisor is one that is in regular touch with their client and maintains good communication.
4. A financial advisor that listens to your needs and requirements
A major reason clients hold themselves from approaching a financial advisor is that they feel their advisor is going to bombard them with a sales pitch that’s mostly copy-pasted. That’s when a client stops talking, and the advisor goes on and on.
On the contrary, an ideal rule of thumb is to ensure good communication between an advisor and client is the 20:80 rule. Here the advisor talks 20% of the time, mostly to explain the process or product options, whereas the client does the rest of the talking, where he/she asks or answers questions to clarify their doubts about the plans that also gives the advisors a fair idea of the needs of the client. The idea is for the advisor to listen to the client and accordingly suggest the best possible solution to their problems. As a client, it is a good practice to ensure that your advisor has good communication with you and listens carefully to your financial needs.
5. A financial advisor that provides value
Another issue that a majority of the clients face is the inability to connect with their advisors. By connect here, we mean a client being unable to understand the heavy jargon an advisor may use at the very first meeting. Terminologies like “alpha,” “standard deviation,” “reversion to mean,” and “mid-cap growth” are phrases that clients are unlikely to know. Instead, it is important that a client understands what the advisor is trying to convey, gets the desired value for working with a financial advisor and knows more about what the financial advisor can do to help them manage their finances effectively. Most clients are unfamiliar about the details and technicalities involved in how the advisor will go about evaluating the most effective financial strategies. Therefore, bringing up information that is not relevant to the discussion can create a disconnect between an advisor and client.
6. A financial advisor that is a coach, educator, and supporter
Just onboarding a client isn’t going to help build a long-term advisor-client relationship. A good advisor relationship includes financial advice that is provided through challenging financial emergencies, valuable suggestions on how one can proceed with their investments, and how and when a client should disinvest or re-invest as while responding to volatile market fluctuations. It is ideal that matters such as health insurance, life insurance, business succession planning, etc., are not overlooked as well. The idea is to ensure that a client is not left in the dark about any financial query or concern.
7. A financial advisor that is empathetic
One of the major reasons why people do not reach out to a financial advisor is that they feel they do not have enough money to invest. Whereas, the fact is you do not have to be a millionaire to consider investing. A good financial advisor is one that makes you feel comfortable talking about their financial situations with you.
Even if your account is small, clients want their financial advisors to take their accounts seriously and give the best possible solutions to their problems. An advisor that is able to relate to their clients financial situation is in the best position to be able to deliver results.
8. A financial advisor that is a problem solver
Clients want advisors that solve their problems, and not one who is a salesperson that sells his/her products. This goes in continuation to being empathetic, as mentioned above. Advisors need to listen to their client, understand their situation, and then give the best possible solution, not recommend a scheme of your own. In other words, the financial advisor’s business goal is not to sell the product but to sell the idea of financial planning, insurance, savings, and investments. Remember poor communication will break the connection between an advisor and client.
9. A financial advisor that is honest and disciplined
Clients want realistic possibilities for controllable actions and probable outcomes when it comes to managing their finances. There could be situations where an advisor may have to communicate facts that may not be easy to hear. However, clients expect advisors to keep them informed about situations that involve their money and investing. They want advisors to prepare them for changing market dynamics and apply discipline at difficult times to ensure financial stability in their overall portfolio. It is crucial that major investment decisions are controlled and that media messages or market swings do not drive impulsive actions.
It is important that your advisor keeps your interests above yours at all times. Doing so will indicate the value of a financial advisor and the firm’s relationship with you, and will bring them one step closer to building a trustworthy relationship with you. Advisors that have integrity, are competent, and accessible at all times help build a good relationship with their clients. Hence, it is a good practice to ensure that the financial advisor that you wish to hire has patience, empathy and guides you through their investment journey with honesty and discipline.
To get in touch with a fiduciary advisor who may provide you with simple and comprehensive financial strategies, use Paladin Registry’s Free Advisor Match Tool. Based on your requirements, we match you with 1-3 advisors suited to meet your financial needs and goals.
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The blog articles on this website are provided for general educational and informational purposes only, and no content included is intended to be used as financial or legal advice. A professional financial advisor should be consulted prior to making any investment decisions. Each person's financial situation is unique, and your advisor would be able to provide you with the financial information and advice related to your financial situation.