Top 7 Best Practices for Newish Financial Advisors
Recently, one of my favorite students from my time teaching financial planning at Towson University reached out to deliver some great news: He’d found a career in financial planning. He followed his announcement with a question:
“I really valued everything you taught me and wondering if you can provide me with some of your best practices as an Advisor.”
Good Lord, I thought, could you be any more open-ended? But as I began to move on to another task, cognizant of the time it would take to respond well, a number of recommendations that I wish I’d have known when I started my career flooded to mind.
The end result is my top seven best practices for newish financial advisors:
1. Establish a broad foundation of base knowledge. The profession of financial planning runs both deep and wide, but by initially focusing on the horizontal spectrum, you’ll better see planning within its broader context. Generalize first, and then work toward specializing if you’re drawn to that route. While not perfect, the Certified Financial Planner™ education requirement provides a good (I think the best), broad base of knowledge to start with, and, in combination with the CFP® Board’s experience requirement and the successful completion of its exam, you’ll also carry the profession’s most recognizable credential.
2. Apply your knowledge. Having knowledge and understanding how to use it are two totally different things, so recognize that establishing a base level of proficiency is a mere starting point. Now comes the work of observing as a mentee, shadowing as an apprentice and perhaps bungling your way through scores of meetings before you actually feel like a professional financial planner. Knowledge well taught leads to understanding; understanding well applied leads to wisdom. Wisdom is the goal (that we never quite reach).
3. Develop skills in critical thinking informed by behavioral science, economics and finance. There’s a huge body of evidence in this arena that the financial industry has largely ignored, perhaps purposefully, because what we learn from the evidence is that personal finance is more personal than it is finance. Nobel Prize-winning behavioral economist Richard Thaler told me that the best piece of advice he could offer financial planners is to “Know your stuff.” The stuff he’s talking about is the non-numerical stuff, the intangible, personal, people stuff that takes a lifetime to master. Accelerate your understanding of the human mind and heart by exploring the work and training of George Kinder, Carol Anderson, Rick Kahler, Drs. Ted and Brad Klontz, and the late Dick Wagner.
4. Always be a sponge. Ask questions of other advisors who seem to be where you’d like to get in the future. There are a lot of great advisors out there, and you’ll be surprised how many of them will respond positively to an invitation to coffee, breakfast or lunch (likely in that order). But as you take note of what you want to do, you’ll inevitably also learn what you don’t want to do. Those lessons may be even more impactful and important.
5. Seek, find and expand your professional community. Peer-to-peer learning is some of the most enjoyable and effective, and I’d recommend your journey start with the National Association of Personal Financial Advisors (NAPFA), a great group of people dedicated to always acting in the best interest of their clients. There are many vibrant Financial Planning Association (FPA) chapters as well. Jump in the deep end early and often. Seek to become a leader or teacher in these and other venues. Much in the same way that you benefited from the counsel and example of more experienced advisors, reinvest some of your time being a mentor to newer, curious advisors.
6. Be discerning in accepting new clients. Look for people you want to work with for a long time, not just people with money. This may be exceedingly hard if you’re solely responsible for generating your own revenue out of the gate, but trust me when I tell you it’s worth it. You’ll find countless articles and books offering systems to grow your business fast—ignore them. You’ll find loads of advice demanding you specialize in a niche—and if you have a niche you’re really passionate about, by all means, do it. But personally, I’ve never found a niche to which I wanted to restrict my client base, so for 20 years I’ve simply specialized in working with good, interesting people from a variety of backgrounds, interests, careers and paths in life.
7. Lastly, take care of yourself and allocate your time. This can be one of the most rewarding careers on the planet, personally and financially, but it can also drive you into the ground if you let it because the work never ends. There’s always another phone call, email or meeting to attend to; there’s always another client or prospect. Follow author Stephen Covey’s admonition to “sharpen the saw” by prioritizing your pursuit of healthy sleep, diet and exercise. Then, learn to set boundaries (like never reading an email after 8 p.m.) into which work will not impinge. Become a time management expert (read the book Deep Work by Cal Newport), and trust that by becoming a better human and living your own life outside of work, you’ll also become a better financial planner.
This process has a beginning, but it doesn’t have an end. One of the saddest things I see in advisor development involves planners who think they’ve arrived, who think they know everything they need to know and have, therefore, stopped growing. But that’s impossible, because the business changes, laws change and, above all, people change. And that’s the business we’re in—the people business.
That leads to one final recommendation I may well have listed first: Don’t wait until it feels comfortable to “give back.” This is a human-helping profession. If you do it well, you’ll be rewarded financially; but if you do it right, the personal rewards will far outshine the other.
This commentary originally appeared May 13 on Forbes.com
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