Financial advisor is a title that means a lot of different things to various people.
Even within the financial profession itself, there is consternation over what a financial advisor actually does and what others expect them to do.
First and foremost, financial advisors work with clients on their money flow. They want to maximize the amount coming in the door, minimize the amount going back out and grow what’s left over each month so that a client can do all the things they desire in life.
Financial advisors want to spend as much time as possible with their clients. This is why they entered into the industry and also what earns them a living. However, their days are filled with a variety of activities that may or may not enable them to devote the time they would like to directly working for their clients.
A typical day for a financial advisor is usually split among the following activities:
— Meeting with clients.
— Managing client expectations.
— Reviewing investments.
— Preparing a clients’ accounts for review.
— Following market trends and best practices.
— Networking with other professional advisors.
— Marketing services.
— Keeping current with regulatory bodies.
Meeting with Clients
In today’s post-pandemic climate, client meetings may be in person or virtual by meeting platforms like Zoom or Microsoft Teams. In-person meetings continue to primarily be held at the advisor’s office, although coffee houses and other casual environments have grown in popularity. Going to an advisor’s office is still preferable to discuss financial planning, both for the confidentiality of the conversation as well as the easy access to technology that can create visual images of each planning topic and possible recommendations.
These meetings typically run about 60 to 90 minutes. A client can optimize this time with their advisor by jotting down a synopsis of their current activities, past and upcoming life events (such as a planned move, job changes, weddings and new additions to the family), as well as any new aspirations, such as starting a business or contemplating a vacation home.
Managing Client Expectations
When the economy makes major shifts, financial advisors have their hands full keeping their clients’ anxieties at bay. This work is primarily handled by virtual meetings, telephone or email, but some clients may require in-person meetings to walk through their financial plan and see how it was designed for resiliency against inflation, potential recessions and other headline economic forces. This communication need can arise suddenly, but it gives the advisor a key opportunity to reassure clients and provide further education.
Many people believe this is the primary duty of a financial advisor; however, how the work is completed can differ dramatically among advisors. Some advisors prefer to conduct portfolio management activities in-house, while other advisors use third-party money managers. Advisors that do this work internally may have hired associates to keep current on market changes and to adjust portfolios according to a portfolio committee. Others may prefer to do this work themselves at the senior level and engage paraplanners and administrative staff to attend to other activities of the firm.
It is important for clients to understand who is conducting portfolio management on their behalf. Fees should also be disclosed, especially in third-party money management.
Preparing a Client’s Account for Review
Much like investment management, firms may view this activity differently. Some firms will use standard presentations from their technology providers to visually display investment results to date, cash flow projections and any proposed adjustments. Other advisors may create personalized presentations for the client’s specific needs that not only include cash flow planning, but also tax planning, risk management, financial therapy and more.
Many advisors will use their internal staff to generate these presentations of a client’s current situation that they then review and overlay their recommendations. Other advisors may choose to do most of this legwork directly, especially if they are outsourcing the portfolio management.
Technology has enabled even the smallest firms to provide excellent review documents, which allow all advisors to showcase their capabilities to oversee the total client picture. But often, it is simple visuals and education that mean the most to clients. Advisors spend a lot of time searching for tools that allow them to produce documents that meet regulatory requirements, but are easily absorbed by clients.
At the review meeting itself, the client may introduce new life changes that will require the advisor to further tweak their recommendations before all parties agree to the renewed course of action.
Following Market Trends and Best Practices
In order to best understand the market, economy, general customer sentiment and the latest in advisory best practices, advisors have to keep current. They do this in multiple ways:
— Reading: Advisors typically read multiple general interest and industry-specific publications daily. By subscribing to their favorite sources, this information is generally pushed to them via emails with daily headline summaries. Many advisors like to multitask while consuming their daily reading, so they can often be seen using digital devices at the gym, standing in line for their coffee and on their train commute.
— Viewing: At many advisory offices, clients will be greeted with a large screen TV featuring financial news shows. This allows advisors to catch breaking news quickly, as well as see how the markets are responding to various headline news.
— Pursuing professional designations: Advisors can choose a variety of professional designation coursework that will allow them to specialize within their chosen niche or broaden their skills. These academic programs require considerable outside study and test-taking before the advisor can add the designation to their name.
— Completing continuing education: Advisors are required to take industry-specific coursework annually to maintain their licenses. These can often be completed in their office, but some compliance testing requires the advisor to go to a sanctioned proctor and complete the requirements in tightly monitored settings.
— Attending industry conferences: These two- to three-day meetings are often held in various cities across the country. They allow advisors to hear prominent leaders in the financial field, learn about new technology and converse with peers about the latest in best practices to provide greater client service.
Networking with Other Professional Advisors
Financial advisors often network with centers of influence, or COI, which include insurance professionals, certified public accountants, estate and tax attorneys, business valuation specialists and others who can answer technical questions about client issues. They may also have a close circle of these outside advisors that they consult with regularly to brainstorm ideas to address unusual situations.
Centers of influence are not only subject matter experts, but great opportunities for advisors to grow their practice organically through referrals. So, advisors find spending quality time with their COIs is value enriching across the board, as they can better serve their own clients, while enhancing their own growth opportunities.
However, advisors also use additional marketing efforts, such as offering educational seminars, client events and networking meetings to enhance their presence in their communities.
Social media has grown in popularity across multiple platforms, including LinkedIn, Facebook, Instagram and TikTok. Advisors have to invest time and effort into both content generation, as well as understanding of each platform’s audience to maximize their content’s reception.
Many advisors also give generously of both time and sponsorship dollars to community events that support their favorite charitable groups or school athletics.
Astute advisors have found that marketing dollars are more efficiently spent when the firm has differentiated itself with a niche practice. This helps advisors make more effective decisions on where to allocate their marketing dollars and their invaluable time. Plus, niche marketing often generates greater pleasure and personal satisfaction for the advisor. A niche practice simply means that the advisor seeks clients with a common overlap, whether that overlap is professional aspirations such as medical professionals, personal attributes such as like divorced women, favored hobbies such as airplane pilots or a hybrid of any of these — for example, LGBTQ+ business owners who like dogs.
Keeping Current with Regulatory Bodies
The financial industry is heavily regulated, and advisors have specific tasks that must be completed on a timely basis. They have compliance activities associated at both the federal and state level, as well as their professional designation boards. Regulations change frequently, and often there is a lag between the announcement of new regulations and clearer interpretations of the rules. Regulators can pop in unannounced, and advisors must have their files in order at all times or face stiff fines, disciplinary action or even expulsion from the industry. Advisors regularly report that they can spend nearly a full day a week in compliance activities or expend considerable dollars outsourcing their compliance management.
Putting It All Together
Financial advisors have full days, but they do have choices within their firm setup that can help them spend more time focused on their clients and their priorities.
The financial industry is made up of solo practitioners and boutique firms to small teams within large organizations. Each of these can create advisor efficiencies of scale, primarily through access to technology and back office expertise. Additionally, there are specialized services for the financial profession, such as licensed virtual assistants and digital platforms that can ease administrative and marketing activities. As a result, advisors can continue to provide services that best meet their clients’ needs and their own.
In the end, financial advisors help their clients understand the powerful effect of money and decipher it to meet their individual goals. Through collaboration with both human and technical resources, advisors can craft detailed plans that allow clients to achieve their plans and bring aspirations to life. And, most importantly, financial advisors bear the brunt of economic storms to assure clients so that they remain true to their plans and don’t wash up on shore from an emotional, reactive response to market upheavals.
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