The brutal truth is that most (i.e. 90%) of financial advisors provide no value. Don’t take that personally and don’t get defensive. There may be a breakthrough here that can make you very successful and turn you into a financial advisor marketing powerhouse.
I just finished reading a financial publication from the fall of 2008. The articles were absolutely worthless. One article said that REITS looked good (they are down 50-60% as I write this). Another article opened with a statement “mutual fund managers are cautiously optimistic about value funds.” Is that another way of saying “We are optimistic but if you lose money, we told you we were cautious.” Another article talked about how you need to educate your clients during bear markets and why this is such a good time to buy (the Dow was at 11,000, now 7300 2-24-09). I like to read old publications because you realize how valueless opinions are and how supposed experts know nothing more than lay people.
If you have been espousing your opinions and making forecasts for clients, you have no value because you have a 50% chance of being wrong. Forecasts and opinions are equally wrong by the brightest PhDs so please keep your opinions to yourself. If you’ve been telling your clients this is a great time to buy, you don’t know that. The Dow could go to 3000 or stay flat for 10 years. Sorry to tell you that those forecasts and opinions you have are worthless and potentially quite detrimental, but its not personal–ALL opinions and forecasts are worthless.
The other financial advisor value proposition often stated is helping clients stay logical and not get emotional about their money. If I were your client and I had just lost 50% of my portfolio, how much would I pay you for that hypothetical value of helping me stay logical or stick to my plan? I would have to say this assistance you provided had no value to me.
So before you go to work tomorrow or pursue any additional financial advisor marketing tactics, ask yourself what substantial value you can be–not that same old diatribe you’ve been telling prospects and clients for years. How can you actually deliver something that has objective, substantial financial advisor value?
Here are some possibilities:
1. Actually make people money in the market You won’t do that in the way you have been taught. Please read “How to Make Money in Stocks” by William O’Neil or “Beating the Dow” by O’Higgins to understand how money is made. Stop using funds and the other packaged crap that other financial advisors use. These packaged products are generally good for the manufacturer, good for the distributor (the BD), pay you good commissions and can be junk for the client.
2. Stop blindly listening to what you have been told like “buy and hold”, “you can’t time the market”, “diversify.” Have these “rules” helped your clients get rich or helped you add financial advisor value? Start thinking for yourself. Start reading voraciously. What really seems to work and not work. Develop your OWN philosophy and point of view and stop following the crowd. IN addition to the books above, read “What Works on Wall Street” by O’Shaugnessey.
3. To add to point 2, have an investing system for your clients like top producers do. For example, buy low and sell high. That means you need metrics to determine what is “low” and “high.” Or have a momentum system to buy or sell what is trending. But you must have a system or methodology as you cannot blow with the wind and sell what the next wholesaler recommends. I successfully use a very simple but objective system as explained in “Beating the Dow” which outperforms most mutual fund managers.
Tags: adding value, financial advisor, financial advisor marketing, financial advisor value proposition, value added
I am against using a financial adviser. I think everyone should educate himself to be able manage his own money (at least thought mutual funds) and not pay someone to recommend him to invest in the funds that give him (the adviser) the more commission…
I agree that an awful lot of financial advisors don’t really provide any value to their clients. It is amazing how many of them will just promote the company book. They aren’t acting in the best interest of their clients. They are merely acting in their own selfish interests.
It’s true that most financial advisers provide just thin air – well paid thin air to be precise.
I have just used a mortgage advisor and he’s saved me so much time. Financial advisors can talk you through your portfolio to make sure you aren’t taking too many risks or too many safe investments. Even if you don’t take their advice it will make you think and my making that appointment to see them you focus on taking care of your finances which many of us are too busy ( stupidly) to prioritise.
While you bring out a good point I think It’s still a good idea to have an opinion from a financial adviser because they might be able to recommend something that is making money. The other thing is some people might not have time to sit down and come up with what they should invest for this is why a adviser would be good too.
Financial Advisor Value – What Value Are Your Really?
Max-
I totally disagree with you there is no way your tipical lay person could learn the knowlege and experance that a financial adviser who does it as a job has. if a financial adviser gives you bad avice and you loose money at least you have the chance of suing them. If you give your self advice and loose money who are you going to blame?
Thanks for sharing this interesting post. It really made sense and changed my thoughts about financial advisors
good stuff you have here, good to know!
The system of broker commissions has created a market for dodgy financial advice – the reality is people trust advisers to work for their interests and that’s simply not the case
I like the ‘possibilities’ that you mention – however, this will GREATLY increase workload and as a result, fees. Trying to build a diversified stock portfolio yourself as opposed to buying one managed by a fund manager is a difficult task that few will want to pursue. And I admit, most funds are cr*p but not all….
I think whether people use a financial advisor or not is down to them (let’s face it there are good and bad examples in every profession). However I do think it makes a lot of sense to at least improve our financial intelligence, if only to see if we are being fed a line by anyone claiming to be an “expert”.
The real problem is that they don’t advise but all they do is sell. They should find product for us which helps us save money or make money not suck us up!!!
Financial Advisors are useful if you have no clue yourself. The only thing is to never buy anything from them. If you really need to, do find out how much commission they will be earning from you before ever committing to anything in paper. Also good to check all the other hidden costs that are often in very fine print.
For sure, a lot of financial advisors don’t really provide any value to their clients. They just think about how to earn money from their customers.
It’s worth less to take advise from the finical adviser,If he have idea where to spend money,why they are not spend and not reach.
I agree with max, i also think everyone needs to educate themselves on financial area… A lot of financial advisors think for themselves and advise you to invest in funds where they will get the most profits!!
I have just used a mortgage advisor and he’s saved me so much time. Financial advisors can talk you through your portfolio to make sure you aren’t taking too many risks or too many safe investments. Even if you don’t take their advice it will make you think and my making that appointment to see them you focus on taking care of your finances which many of us are too busy ( stupidly) to prioritise.
I would rather do a little more study about finance, i know it better to appoint an specialist however, before that i would like to try this one by myself once
The use of a professional financial advisor does not guarantee investment success.
Of course there are always people who need financial advisors but in general I’m against them. If you do mind about your money enough you should learn the basic concepts about investing and risks that go along. I’ve been to some free advising sessions and everything they said is not rocket science. Everybody can learn this and be his own advisor.
[...] It’s the same reason why there are hardly any Bill Gates or Thomas Edisons. The folklore is that Thomas Edison made TenThousand attempts to invent the light bulb. The tale associated with Bill Gates is that even after Microsoft accomplished great success, he continued working frightened of competitors and drove the organization to innovate when it might have rested on its laurels. Many financial sales pros won’t endeavor to a thing even a 2nd try if they don’t get instant sales success. Then when they do have a particular ease and comfort, these people level off and stop pushing. And therein lays the gap between the ones that make more than the rest imagine having. Read on to find out the levers associated with success that will aid just about any financial advisor. [...]
[...] It’s the same reason why you’ll find hardly any Bill Gates or Thomas Edisons. The folklore is that Thomas Edison made 10,000 tries to develop the light bulb. The story of Bill Gates is that despite Microsoft reached great success, Gates kept working fearful of competitors and drove the company to innovate when it could have rested upon their laurels. The majority of financial advisers will not likely endeavor to something even a 2nd try when they don’t acquire quick sales success. When they do acquire a particular ease and comfort, they will level off and stop pushing. And therein lies the gap between those who generate a lot more than the others imagine having. Read on to identify the levers involving achievement that will aid any kind of financial advisor. [...]
You must be Financial Advisor by yourself to hire good one
Yes it is true that paying some financial advisor would be too risky because you pay a financial advisory and you put all your fund responsibility on to his shoulders. you feel easy but things very related to money and funds managements business never have such behavior. You cannot relay and trust a whole adviser advices only, your personal adhesiveness to your funds with proper learning and knowledge is compulsory to go with this kind of work. Yes Financial advisory can do something good to your fund raising business but you need your personal perception to boost the things in your own ways which are not that rocket science. Everybody who surfs the net can explore thousands of websites thats coin daily basis the lots of fund and forex reports with forecast of world market. doing that regularly, you need a advisor to go with some specific decision but not every time.
I myself have read “How to Make Money in Stocks” by William O’Neil, it was a fantastic read and would recommend it to everyone. Also, it is a wise choice to visit a financial adviser before trying out things yourself, if you do things wrong it could have a huge impact on your budget.
I personally do not trust financial advisors since the financial crisis. I see a connection between the crisis and the financial sector, so I wouldn’t give my money to be invested by these guys.
[...] It’s the same reason why there are very few Bill Gates or Thomas Edisons. The folklore is that Edison made TenThousand attempts to create the light bulb. The story associated with Bill Gates is that even though Microsoft reached great success, he kept operating frightened of competitors and drove the company to innovate when it could have rested upon their laurels. Nearly all financial advisors will not attempt something even a second time whenever they don’t find instant sales success. Then when they do achieve a specific comfort and ease, they level off and stop pressing. And therein lies the real difference between those that generate more than the others imagine having. Read on to find out the levers of achievement that will help any financial advisor. [...]