Financial advisors proffer solutions to a range of financial issues, a job that most people lack the expertise to perform. They are tasked with diverse roles and many play the roles of assets managers, planners, and marketers if and when required.
Financial advisors need to master the ability to be versatile and analytical. While majority of advisors have mastered this process, many still struggle to make ends meet. Running their practice gets particularly difficult during and as a result of this pandemic period. Smart advisors devise a means of running their practices from home.
These are some of the challenges financial advisors are predicted to face this year.
Economic Decline
Experts foresee a disruption in the economy this year which is highly likely to affect the financial service industry in terms of low-interest rates. This poses a difficulty for fixed-income investors and investors who wish to live off their investments. Many investors expect what is called a bear market as a result of the change in the political climate which is most likely to affect the client’s portfolio.
Significant Fee Compression
Many clients are discounting how they value financial advice and would rather resort to self-help instead of consulting a professional. They may decide to make investments themselves; financial advisors must prove their money’s worth in order to stay relevant.
New Self-Service Technology
There are digital platforms offering financial advice services these days including online financial platforms that offer virtual planning services to people. This seems like a more simplified method of getting investment, tax, or estate planning advice but it does not compare to the interpersonal meeting with a financial advisor whose aim is to satisfy the client’s financial goal.
Advisors need to up their game in order to retain their current clients as well as to attract more. As a financial advisor, your clientele, available technology, regulations, and practices are ever-changing. You need to evolve with these changes, get left behind. Stay relevant and equipped with resources.
Emotional Involvement
While financial advisors always have to stay rational and logical, most clients are driven by their emotions. Therefore, advisors must be able to relate with the clients on an emotional level. This includes explaining the consequences of an investment or any related decision to the understanding of the client.
Your Clients Don’t See Your Value
In a situation where clients can get the same financial planning services that you provide from an automated system, they are undoubtedly going to question whether or not you are truly needed. Nowadays, an advisor cannot bring value to clients by merely putting money into IRAs or trading stocks. You need to do more in terms of mentoring them and connecting them with professionals in order to add more value to their lives. Find a value proposition unique to your brand.
Communication
Staying in contact with clients is important. An advisor can very easily lose touch with clients once they fail to follow up with them. Constant communication is necessary to keep a client-advisor relationship flowing and this is the sole responsibility of the financial advisor. However, with recent developments, staying in touch with your clients can be difficult. You need to be available to safeguard their portfolio and manage the vulnerability of investors.
Blaming Advisors For A Downturn In The Market
An advisor has no control over the financial market or its outcome. Your clients are also well aware of this fact but it still does not stop them from blaming the advisor for any negative outcomes like stock tanks or downturn of their portfolio. People expect to receive expert opinions when they hire a financial advisor.
It is therefore important to maintain a cool head and temperament, and deal with any testy clients in a patient and rational way.
Finding A Story For Your Brand
Potential clients are already aware that financial advisors sell financial products. What they need to see in order to employ your services is the extent of your capabilities. Your customers need a ‘why’ — why they should choose your plans and the products you recommend. Your story will allow the client to identify your brand better and builds a reputation for you.
In Conclusion
It has undoubtedly been a hectic year and the effects of the year will take an undeniable toll on financial advisors. Overcoming these challenges requires a formidable action plan; one that is unique to your brand. It is vital to be prepared for the worst case scenario in order to tide over the challenges that 2020 has brought and may continue to bring.
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