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Advisors: Avoid These 4 Road Blocks to Success

Advisors can become vulnerable when they become consumed by the day-to-day demands of their clients, and neglect the long-term needs of their practices.

Financial advisors are accustomed to inspecting their clients’ portfolios for potential vulnerabilities, whether they are retirement shortfalls, missed tax savings, or risky investments. But advisors often fail to apply the same routine scrutiny to their own practices, reviewing their operations and service models for any weaknesses that might be holding them back. That can lead to vital deficiencies that impede growth and compromise client service.

Advisors can become vulnerable when they become consumed by the day-to-day demands of their clients, and neglect the long-term needs of their practices. Sometimes that’s the result of a failure to keep abreast of industry developments, such as advances in technology; sometimes it’s simply a function of weeding out old habits. Here are four problem areas advisors frequently overlook:


Compromising Fee Structures

Advisors tend to give away their most precious resource: time. They need to give careful consideration to the value of an hour’s time and be consistent about enforcing it. That will help them determine their assets under management target goal, and what financial planning fees to charge for services to remain profitable.

Advisors who lack confidence or don’t strongly believe in their value often compromise their fee structure to win clients who might be reviewing the costs and services of multiple firms. That leaves them alternating between a stated fee schedule and a discounted one. But their ability to achieve profitability becomes strained if fees are compromised over time, ultimately eroding their revenue stream. Instead, they need to clearly communicate their differentiators to existing clients and prospects, and explain how their fees are justified over a long-term relationship.


Wasting Potential Resources

Firms frequently fail to recognize the full range of skills and abilities that exists right in their office. Advisors often don’t spend enough time grooming their staff through training, mentoring and professional development programs. Some may have launched their practices without a human resources staff; others simply don’t enjoy managing people. Many haven’t taken the simple step of writing out job descriptions. But establishing and expanding the roles and knowledge of key staffers is critical to creating a legacy business, and one that can run in the lead advisor’s absence.

Missing the Tech Wave

Adopting the right technology can have a dramatic impact on an advisory firm. But advisors don’t always invest in their industry’s technology or spend enough time learning the full range of what it can do. That new client relationship management system, for instance, may turn into a glorified Rolodex if they fail to take full advantage of its scalability and workflow capabilities. They risk missing out on other opportunities to improve client services without critical financial planning software.


Failing to Communicate Services

Clients sometimes forget the full range of services an advisor offers. And advisors often forget to remind them. That’s when the advisor sits down with a client to talk about the need to sign up for life insurance, and finds he or she already secured a policy through an insurance agent. That could also mean clients never ask for a needed estate plan because they don’t realize their advisor drafts them. Some high-net-worth clients who have a will don’t realize they may also need a trust. And misunderstandings over assets can arise, for example, if a client doesn’t know to loop the advisor into discussions with an outside tax attorney.

Advisors need to be consistent about restating their services and breadth of knowledge, paying careful attention to the evolving needs of clients to determine when new issues emerge and new preparations are required. These educational discussions can serve as opportunities to communicate value and reinforce the vital role that advisory services play in an investor’s life.

These all remain persistent challenges for wealth managers. The first step is recognizing they exist. The second is to address them head on. But it can’t stop there. Advisors need to think of their business as a continually evolving organization that needs periodic evaluation. As one weakness is stamped out, another will emerge as developments with personnel, service models, fee structures and other aspects of their firm arise. So, while it’s critical to ensure clients are maximizing the use of their assets, that can’t be the only focus for an advisor who wants to remain on the path to growth and sustainability.


Matt Matrisian is Senior Vice President, Practice Management & Strategic Initiatives at AssetMark, Inc. @AssetMark.

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