This week I’m turning another year older. I am more than content with where I am in my life and my career. I have the distinguished pleasure of serving people through a successful financial services brokerage with three offices and a great team. I thrive on the testimonials and comments from clients which cause we to want to learn and do more for them. I also reflect on the negatives. They happen. We’re human. We take it in stride and use them as learning points and an opportunity to improve.
This opportunity also presented itself as away to discuss a common question people ask. It is hard work to find a good relationship with an Advisor. It is a long term relationship and needs to be based on a very strong trust and fiduciary platform. So the question is, what should you look for in an Advisor relationship? What traits should Advisors present? My perspective may surprise you.
Curiosity
I’m going to shock you. One of the ones that comes to mind is curiosity. It is a trait that exemplifies our tag line. #KeepingLifeCurrent. An insatiable curiosity implies a dominating need to learn and be current. Advisors need to be current in their technique, knowledge and technicality. It is critical to success not only to prosper in a chosen vocation, but for success overall in life.
Although biting curiosity bordering on obsession along with an insatiable need to learn should come natural to successful advisors, it’s not the most important quality. Oh, curiosity and a thirst for knowledge is absolutely near the top of the list. However, there’s an overpowering internal force some professionals possess. These advisors are passionate advocates for clients and anybody who seeks help making money decisions.
Clients’ best interest
Fellow professionals will disagree with my belief that those who work the frontlines for cannot be advocates for clients; loyalty is dictated by their employers. That may tow the line in big name firms or financial institutions but much less in independent firms. Yes, we sell products. I’m fortunate to know financial professionals who strive to do the best for consumers of their products. However, loyalty comes with constraints and that fact will never change.
An imminent industry “client’s best interest” rule for brokers won’t completely alter behaviour, either. The rule is designed to obfuscate the boundaries between a “salesperson” and a fiduciary, such as a Certified Financial Planner who is a professional who adheres to the following basic tenets:
- Put the client’s best interests first;
- Act with prudence, with the skill, care, diligence and good judgment of a professional;
- Do not mislead clients–provide conspicuous, full and fair disclosure of all important facts;
- Avoid conflicts of interest;
- Fully disclose and fairly manage, in the client’s favour, unavoidable conflicts.
The culture of a large financial services firms is driven to sell product and make decisions primarily in the interest of shareholders. Pending rule changes provide for a revision of codes of ethics and standards. The enhanced code is a vast improvement as it clarifies the Certified Financial Planner (CFP) as fiduciary at all times, in every financial interaction.
Let’s face the ugly truth. Many licensees use the CFP marks just for sales purposes in order to augment their apparent credentials. First, we have those whose employment circumstances require that their first loyalty is to their employer. Next, we have those successors to my first manager who believe the most important function of a financial plan is to pound sales. They will look you square in the eye and tell you they are “advisors” when they put together financial plans but “buyer beware” salesmen when it comes to implementation. They take off one hat and put on another with nary a thought about conflict or confusion. At the end of the day, CFP must stand unambiguously as both the trademark and hallmark of fiduciary advice.
Empathy
In my opinion, empathy is also a spark which ignites traits one should seek in an advisor – a curious nature about peoples’ lives, motivations, histories, a ravenous need to gain knowledge and the personality of a nurturer.
My childhood centred around the ebb and flow of a socio-economic urbanity of families and single parents. Peoples’ doors were slightly ajar in the summer for neighbourhood kids. I sat in on conversations, observed and was embraced by a rich mix of races and cultures. I spent countless hours with these extended families to escape and complement my own. I revelled in fun stories, felt their heartaches. I respected boundaries – right down to off limits set by plastic covers on fancy gold velveteen couches. These individuals weren’t strangers, they weren’t friends, they were more. For my own survival, I needed to care about them too.
Empathy became a way of life for me. It added richness and engagement to my childhood. The nuances of these lives fascinated me. Not the stuff the outside world knew. It was the stuff going on, discussed at dining room tables or in living rooms, that thrilled me. I was granted silent permission to listen. I was diligent to not disrespect unspoken privileges provided to me. Over time, empathy developed into nurture and protection; loyalties to friends and families.
There are three definitions of empathy – cognitive, emotional and compassionate. A successful advisor should possess a bit of all three but I’m going to focus on cognitive empathy.
Cognitive empathy is simply knowing how another person feels, what they may be thinking. This type of empathy can help with negotiation or motivate people to act. As advisors, we must care enough to help clients understand their cognitive and emotional biases. We must remain non-judgmental listeners who genuinely care about client outcomes. Good advisors understand when compromise is an appropriate choice.
The great unknown
During the height of the financial crisis, there were long days of face-to-face, back-to-back meetings. I encouraged clients and those who sought guidance to open up about what was going on in the economy, their lives and portfolios. It was very emotional. Some of the stories were tragic – lost jobs, lost savings, lost souls. Frankly, regardless of recovery, these stories still haunt me.
Instead of discounting feelings and advising clients to sit there and do nothing because “markets always come back,” I went through various exercises to motivate clients to go all out there and explore the possible fruition of their greatest fears. What’s cool about the brain is how beliefs can take on the feel of reality. It’s also not so cool how the brain goes direct to the greatest fear first which is usually a far stretch from what occurs. I encourage them not to hide but share their thoughts. I don’t discount them.
Sort of securing a rope around their waists (mentally of course). While I hold tight to the other end, I need them to leap willingly into another dimension of fear. I need them them to explore what they think may occur and share it all with me. Remember I’m holding the rope.
I want their minds to go where it’s been hesitant to roam. Or at the least, share with me the sentiments they’re afraid to discuss with others. Once their out there, communicate their thoughts. Now for the rope, I’ll pull them back into the real world. Then we’re going to discuss and adjust. I’ll use past examples of how we eventually recover.
You see, people willing to play my game, who freely vented frustrations and voiced the wildest, imagined outlier economic events, began to realize that they were alright and the sky was not falling. Maybe they were able to realize they were overacting. Either way, I was willing to listen and take the concerns seriously as opposed to telling people who lost in past, that I knew best. Heck, we have had serious financial obstacles and we’re all out there. There is always risk. Any financial expert who tells you different is clearly lying.
For example, as markets bottomed back in the summer of 2010, I was able to employ the same game to help investors battle a deep recency bias and slowly begin to build equity positions. Hey if you believe the stalwarts of the economy are going to crumble and your money isn’t going to be worth anything anyway, why not take a gamble.
The bottomline
To me, empathy is the core of my personal success. It cannot be faked; however, it can be developed. To be proficient at a job is rewarding. However, to be tested throughout life prepares an advisor to maintain an uncompromising stance if required to safeguard a client’s financial health. I’ve done it. It’s incredibly uncomfortable. A financial advisor who lives his or her finest truth will find that making every decision for the greater good of the client becomes a natural and easy choice. An advisor’s disguise as confidant and protector to suit an employer’s goals would motivate me to find another line of work or at the least, a company that puts itself out there as a fiduciary. It did. That’s why I created an independent brokerage based on the clients’ best interest rule. Our fundamental approach to be a fiduciary firm is the first way of Keeping Life Current.
