What makes a good adviser?

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Oct 7, 2008 9:36 pm

If advice based on sound judgment is part of our value to clients, how much of that comes from technical knowledge? By this I mean understanding the big picture economy, balance sheet strength etc. and how these types of issues effect corporate profitability. Newbies like me seem to lack much experience to draw from in this regard.

Sure, human skills like hand holding clients in tough times, accepting
rejection and actually LISTENING to client needs are key to building a
book, but ultimately you have to provide clients with solid
recommendations based on knowledge. (The initial training from Jones two years ago seems like baby steps to me now...)

During my first year or two at Jones, I often met with 50 or 60 year-old
prospects who, upon talking with them turned out to be more knowledgeable than me! I
scored well on the 7 exam and continued to read the WSJ afterward, but my gut tells me that's not enough. How many other new Jones FA's experienced this?

I've recently received two acceptance letters from MBA (Finance) grad schools and have some bridge money set aside so I can afford to take two years off. Maybe it's a good time to do so? I understand that an MBA is not WHAT makes one successful, but I'm
wondering how much of a factor the technical part of advising helped veteran FA's to become successful.


What separates veterans from newbies? Sure, experience does, but what does that mean? Thoughts ? ? ? Thanks, Joe.




Oct 8, 2008 8:15 am
FiveCentJoe:

During my first year or two at Jones, I often met with 50 or 60 year-old
prospects who, upon talking with them turned out to be more knowledgeable than me! I
scored well on the 7 exam and continued to read the WSJ afterward, but my gut tells me that's not enough. How many other new Jones FA's experienced this?

I've recently received two acceptance letters from MBA (Finance) grad schools and have some bridge money set aside so I can afford to take two years off. Maybe it's a good time to do so? I understand that an MBA is not WHAT makes one successful, but I'm
wondering how much of a factor the technical part of advising helped veteran FA's to become successful.


Your realization that you do not possess deep technical knowledge is a sign you have progressed from the "don't even know what you don't know" stage to the "don't know but realize you don't know" stage.  It may not be much comfort, but that's progress.  It's hard to solve a problem until you recognize that it exists.

There are many ways to improve your knowledge.  Taking 2 years off to get an MBA is, I suppose, one option.  But if your long term plan is to remain an advisor, I would not recommend it.  It's not so much that you wouldn't gain more technical knowledge that could be useful - you would - but not enough to make a huge difference and you would give up all the clients and momentum you've worked hard to achieve the last couple of years. 

More common is working to deepen your knowledge while still working by pursuing a CFP or other relevant designation.  You would learn more relevant information in a shorter period of time that way than an MBA, which is a broader field of study.  I'm glad I got an MBA, but it was more useful in my previous corporate finance work than it has been in this field.  But I would not pursue it if my known objective was to stay as a FA.

In any event, the technical knowledge gained by obtaining an MBA is useful or not depending on what you want to do.  If you think you want to stay an FA, study and pursue a relevant credential while continuing to work and gaining experience.  If you want to change careers, then perhaps an MBA would be worthwhile.


Oct 8, 2008 9:19 am

"If advice based on sound judgment is part of our value to clients, how much of that comes from technical knowledge? By this I mean understanding the big picture economy, balance sheet strength etc. and how these types of issues effect corporate profitability. Newbies like me seem to lack much experience to draw from in this regard."


 
I'm finding this quote to be interesting.  I think that technical knowledge is of gigantic importance.   However, what you are describing as technical knowledge is not what I would consider to be technical knowledge.  It sounds as if you are describing technical knowledge as a way to pick good investments.  I've been at this for a long time and I don't have a clue as to what will be a good investment.  I only know in hindsite.
 
Yet, my technical knowledge has been very instrumental in my career.   Should the financial decisions of your client be based upon the big picture economy or should they be based upon the goals, objectives, time horizon, risk tolerance, health, etc of the client?  I don't have a clue as to tomorrow's economy, so all of our decisions on based upon things having to do with the client. 
 
I've got tons of knowledge including the knowledge to know what I don't know.  I use this knowledge along with my sales skills to do what is in the client's best interest.
Oct 8, 2008 9:50 am

Joe,


I think my expierence is somewhat similar to Morph.  I have a strong technical background in finance.  It has helped me immensely - but not the college degree part - it was the 12 years I spent in corporate finance that has helped me.  I spent years at the top of the finance food chain within my organizations, dealt with extremely wealthy business owners (unfortunately all wealthier than my current wealthiest clients), and had to address very, very demanding and critically important financial, operational, and political decisions.
 
My point is not to talk about me.  My point is for you to understand that experience cannot be found in a lecture hall, online, or framed hanging above your desk.  I have learned more about this business in my 3 years in this business, than I ever learned from an MBA program.  Does the MBA help?  Yes, somewhat.  But to a very, very small degree.  It helped open doors in my previous career.  But in my previous career, I was amazed how different corporate finance and accounting was from the "books".  My college courses never taught me how to track down someone that was embezzling from our firm.  It never taught me how to "sell" a budget to my management team.  It never taught me how to break the news to my superiors that there was an un-reconciled liability that we had just discovered on our balance sheet.  It never taught me how to read the owners of the business, and which buttons to push or not push when reviewing operational results.
 
To be successful in this business you need to:
- prospect
- prospect early
- prospect often
- Be able to read people
- Be able to LISTEN to people and fight the urge to talk
- Be generally social and "likable"
- Have good technical knowledge.  It helps to be able to explain to people what you do, what's going on in the market (not that it matters - but it shows confidence and understanding), and why you are recommending what you are recommending.
- Understand your clients.  They are each different, and each have different needs.  You have to make recommendations to them that will survive regardless of the "market".  IOW, don't pin your recommendations on the market going up all the time.
- Have an opinion
 
How can you get technical knowledge?  It's not from your B/D (jones in your case).  It's from reading.  Read a LOT.  I read nearly every night.  I learn as much as I can about everything I can.  Get the CFP if you can.  This will provide MUCh more technical knowledge for you in this industry than an MBA.  Although I have heard that there are more and more MBA programs that are focusing on "financial planning".  Most of them work CFP prep into their curriculum.  I'm too far removed from school to know or care if there are actually many programs like this.  But you could kill two birds with one stone this way.
 
But if you think getting out of this biz to get your MBA is going to propel you in THIS career, I think you may be mistaken.  Although it may give you more confidence....
Oct 8, 2008 7:04 pm

Thanks everyone for your input!

So much insight, experience and wisdom from your posts that I will consider... Joe.

Oct 8, 2008 10:32 pm

Bravo, B24!

Oct 8, 2008 10:39 pm
Borker Boy:

Bravo, B24!

The responses were so good I printed them all... and keep them in my notebook !

Oct 10, 2008 9:24 am

I also recommend prospecting people with less than $5,000 to invest.  You might laugh - but it's really an under served market.  In fact - I think Obama would even say that it's not "fair" that some people might have a portfolio higher than $5,000.