If you ask financial advisors for tips of the trade, chances are you'll receive a multitude of opinions. But boiling down this diverse wisdom reveals more commonalities than differences. In fact, when it comes to secrets of success, seasoned advisors' recommendations can easily be divided into five core beliefs.
"There are no easy steps, and there is no one path to achievement," says Todd Rhine, an independent financial advisor and planner in Hilton Head Island, S.C. But, he concedes, "When looking back at my own professional experiences and lessons, I have to ask myself: What would it have meant to me to know early on in my career what I know now?"
The first rule is to define exactly what your business is-in other words, what services you're providing. Do you want a practice that's advice-driven or sales-driven? Who is your ideal client? What is your standard of excellence? "Have a clear and original vision that is well-communicated and understood," suggests James Hansberger, an Atlanta-based financial advisor in Morgan Stanley Smith Barney's global wealth management division, adding that certain core principles should be at the heart of the practice.
That's not just a philosophical matter. It is-or should be-a formalized, documented basis for a serious business plan. "Advisors often forget they are running a business-it's not just some higher calling," says John Brackett, a partner at BAR Financial in Pleasant Hill, Calif., and a regional director of the Financial Network Investment Corp.
In other words, you can't just hang a shingle and expect success will come. Rather, the trick is to figure out what you're good at-better at than anybody else. "It's important to have a niche, a characteristic that differentiates you from the rest," says Arthur Cooper, managing director of the Irvine, Calif.-headquartered Cooper McManus. "Why would someone work with you versus someone else down the street? You want to position yourself as having expertise in a specialty, something people can't just get anywhere or look up online."
Typically, that specialty has to do with your individual skill set. But it also has to do with your target market. Do you want to primarily serve clients above a certain earnings or net-worth threshold? Do you feel more attuned to the needs of widows, say? Or veterans, civil-service retirees or some other subpopulation? Their issues are not necessarily all the same. "I began my practice trying to be all things to all people, and found out rather quickly it was not a model that was easy to run or be successful at," says James Barnash, senior vice president at Merion Wealth Partners in Berwyn, Pa.
Think of this target market not so much as a limitation but a focus, an area of emphasis. "You might feel like you're narrowing down and excluding other types of clients," says A.J. Sohn, managing director of Antaeus Wealth Advisors in Boxborough, Mass. "But it doesn't mean you can't take on clients who don't fit that niche. It's just that you're trying to build the business on the type of clients that you like to work with best."
Or, as Michael Kay, president of Livingston, N.J.-based Financial Focus, puts it: "Know what makes you special or different. Define your uniqueness and share it liberally."
From this definition of your specialty and target market derive all things-from how you design your office to your marketing "brand." "If you're aiming for the high-net-worth market, for example, everything from your office design to your wardrobe must reflect that," says Brackett. "After all, you won't get much of that business if you're working in jeans out of a Volkswagen in your garage."
You could become part of a well-known national brand or create your own-developing your own company logo, Web site and so forth. But none of that is etched in stone. "It's a sort of evolutionary process," says Brackett. "You need to continually refine yourself, question the business and make sure you're going down the right path."
Whatever your brand and target market, nothing is more critical than client service. "Be available," urges Brian Parker, managing director at EP Wealth Advisors in Torrance, Calif. Advisors, he adds, need to be likable and build relationships. "I get to know my clients on a deeper level." Most, he says, "stay engaged through market cycles because we have a friendship and they know I care about them as people."
Parker tries to treat every client as if he or she were the only one. On this point there seems to be little disagreement. "It isn't what you know; it's how you make your clients feel that makes the biggest impact on their lives, and ultimately on your business," says Rhine. "You don't need to be the smartest 'financial guy' to be the best advisor. But you do need to be able to establish, develop, deepen and strengthen a relationship that goes light years beyond what you're taught in business school."
To be sure, practical knowledge is essential-but caring often comes first. "People don't care what you know until they know that you care," says Gregory Lowder, a registered representative at Jacksonville, Fla.-based JHS Capital Advisors. "Clients don't leave advisors for poor investment advice; they leave for lack of contact and service. A good advisor needs to listen carefully to what a client has to say; you should talk less and listen more."
Listening to your clients isn't always as easy as that may sound. "Listen not just to the words," cautions Sohn. It's partly a matter of watching body language, partly being sensitive to context. For example, he says, if a client expresses a desire to be more conservative in his or her investments, you might come back with a proposal for a low-risk portfolio-and miss the reason why the risk tolerance has suddenly dropped, why he or she has become more concerned about generating income. "You have to think about whether you're getting the message right," Sohn says.
One way to avoid this pitfall is to ask clients meaningful, empathetic questions. "Are your questions designed to learn about their holdings so you can sell a financial product, or are they designed to help you understand your clients from their perspective?" Rhine says.