Chapter 1

Looking at the Big Picture

IN THIS CHAPTER

Deciding the kind of financial advisor you want to be

Conducting a quick self-assessment

Getting up to speed on the basics

Building and growing your client base

Making the leap to starting and running your own firm

Becoming a successful financial advisor is a process that involves deciding the kind of financial advisor you want to be, developing the personal and professional attributes that make you a natural for the job, obtaining the formal education and training required, gaining on-the-job experience, and then honing your skills as you build your practice.

The acid test is whether you consistently enable clients to achieve their financial goals. This test sounds easy enough, but like any marathon or triathlon, the path to victory is strewn with potential pitfalls. Success depends on your ability to carefully balance your clients’ risks and returns (their liabilities and assets) while keeping them from veering off course. To achieve success, you must serve clients in a way that they understand how your guidance keeps them heading in their desired direction and why your role is so important to them.

This chapter provides a bird’s-eye view of how to become a successful financial advisor by touching on the key topics covered in this book. The remaining chapters take a deeper dive into these topics and other areas you must attend to in order to achieve success as a financial advisor.

Understanding What a Financial Advisor Does (or Should Do)

A financial advisor is a person who helps her clients plan and manage their finances to achieve their short- and long-term financial goals. Ideally, every financial advisor should meet the following two criteria:

• Fiduciary: A financial advisor has a fiduciary responsibility to her clients, meaning that the advice provided is in the best interest of the client instead of what’s best for the advisor, such as commissions received for the sale of a financial product or solution.

  Serving as a fiduciary is easier said than done, considering that so many financial advisors work for firms that have institutional agendas (to sell specific products or solutions) that compete with this standard.

• Holistic: A financial advisor must attend to all aspects of a client’s family finances to not only grow wealth but also protect it in ways that are carefully planned to meet the client’s goals and objectives. Financial goals include buying a home, paying for children’s education, affording a comfortable retirement, starting and running a business, supporting a charity, passing down assets to heirs and beneficiaries, and more. Holistic financial advice also includes ensuring that the client is properly insured against events or incidents that could undermine the client’s ability to achieve those goals.

A financial advisor doesn’t merely sell insurance policies or manage investment portfolios, but that doesn’t mean that the advisor must do everything. Financial advisors often outsource many of the tasks required, such as referring a client to a lawyer for estate planning or using a turnkey asset management program (TAMP) instead of personally managing a client’s portfolio.

Unfortunately, there’s quite a bit of confusion in the marketplace as to how someone serves clients as a financial advisor. Many financial advisors focus on certain investment or insurance-related financial products. Others are licensed to advise on a product purchase or are registered to provide holistic financial advice that’s not product related. The variety of roles and the complexity involved in addressing all of a client’s financial needs present big challenges, but they also offer a world of rewarding opportunities.

Evaluating Yourself: Do You Have What It Takes?

Not everyone is cut out to be a financial advisor. Certainly financial knowledge and skills are necessary but aren’t sufficient. Interpersonal and communication skills are also essential. You have to love being with, talking with, and, most importantly, listening to people — all day, every day. As with any profession, your ability to acquire clients is directly related to your ability to add value to their lives. In addition, your interactions with clients and others is the fuel that keeps you going when the inevitable roadblocks, rejections, and market crashes dampen your spirits.

In this section, I encourage you to conduct a self-assessment to determine whether you have the qualities and qualifications to become a successful financial advisor, and I lead you through the process. Chapters 2 and 3 provide more detailed self-assessments, with Chapter 2 focusing on your personality and motivation and Chapter 3 examining your personal and professional qualifications.

Do you have the right personality?

This profession has a place for all personality types, as long as you choose a role that fits. All firms need financial advisors to fill the following three roles:

• Minders run the business/practice, organizing, managing, hiring/firing, and setting goals and agendas. Typically, these are partners who’ve been in the business for many years, made the business-building mistakes, and learned from them. To be a minder, you must be a leader with excellent organizational, interpersonal, and communication skills. You may not be working closely with clients, but you’ll be leading and mentoring associates and staff.
• Finders source new clients. These advisors are great at filling a pipeline and marketing services and solutions. Finders can be any age and at any level of experience, but they must have excellent interpersonal and communication skills and genuinely enjoy interacting with prospective clients.
• Grinders do research, analysis, illustration, and paperwork. Whether it’s the research that drives discussion at investment committee meetings, or running several insurance carrier illustrations, these advisors are the worker bees of the business. This is a great position for new college grads, because it gives them the opportunity to figure out how the business runs from the inside-out. It’s also great for those who aren’t exactly people-persons.

See Chapter 20 for more about these three roles and how to team up with other financial advisors to build productive synergies. If you choose to practice as a lone wolf, you’ll have to fill all three roles.

You can be an introvert in this business and be successful, but only if you’re teaming up with complementary advisors. Forcing yourself to become a finder when you love manipulating spreadsheets all day isn’t the best use of your time or career development. This profession has room for all personality types, but you need to be honest about who you are and what you enjoy doing before taking the leap.

What’s driving you to consider this career?

If you’re looking for money, you’ll find it in this business. However, just because you’ve uncovered methods to routinely ring your cash register doesn’t mean you’ve achieved success as a financial advisor. If you’re motivated solely by the promise of a six-figure income, you probably won’t become successful for two reasons:

• You’ll be focused on your own success instead of that of your clients, and your clients and prospective clients will sense it.
• You’ll be more prone to conflicts of interest, which could get you into legal trouble or at least tarnish your reputation in the community in which you practice.

Nothing’s wrong with wanting to earn a good income, but your motivations should also include the following:

• A desire to have a positive impact on your clients’ lives (and a genuine concern for their well-being).
• A desire to serve on a team and to coordinate the team’s efforts and expertise to improve your clients’ financial outcomes.
• A hunger for relevant knowledge and skills to continually improve your ability to serve your clients. To be successful, you must keep up on rules, regulations, tools, and techniques.
• A desire to teach others the...