Don’t Be Overly Optimistic
Some young advisors get caught up in delivering good news to their clients, which can be a problem when the market plummets.
“One of the biggest lessons of my career is the importance of proactively preparing clients for market volatility,” said Bob Peterson at Crescent Grove Advisors in Lake Forest, Ill.
Early in his career, he didn’t spend enough time discussing with clients what to do during major market jitters. This, he said, made it “much harder to calm anxious clients when downturns occurred.”
Today, in contrast, he stresses that a solid, long-term financial plan incorporates potential short-term volatility. “The market is going to fall, and it’s going to feel uncomfortable,” he said. “But if I do my job properly, every client’s asset allocation is built to endure corrections.”
Don’t Try To Predict The Future
For Mark Van Drunen at MAI Capital Management in Cleveland, the greatest shame involved “venturing beyond my areas of proficiency.”
Back in August 2007, he confidently dismissed concerns about the subprime mortgage market. Not long after, of course, subprime debt sparked the global financial crisis.
Thinking back on his “grave miscalculation,” he said, makes him cringe. It’s not just how inaccurate he was, but how overconfident and superior he had felt at the time. “I had done my due diligence, consulted experts, and believed I could predict the future. However, my mistake lay in thinking I could gather enough information on a topic about which I knew very little,” he said.
Today he tells clients about this embarrassing experience to emphasize “the fallacy of predicting the future and the false sense of security it provides,” he said. “The true measure of success lies not in predicting outcomes but in guiding clients through a journey of financial planning that equips them to navigate the uncertainties that lie ahead.”
The Dangers of Specialization
Ken Van Leeuwen at Van Leeuwen & Co. in Princeton, N.J., regrets specializing in niche areas too early in his career.
As an up-and-comer, he decided to focus on philanthropic planning. It did not work out as he had hoped.
“What I found is that going so deep into one specific area of planning is very challenging,” he said. The charities were protective of their donors, he said, and many were skeptical about him as a young outsider.
Narrowing his business before he’d really established himself “cost me both money and time,” he reflected. “While focusing on a niche area of planning can be a lucrative and successful strategy, it is important to do so at a time when your business is established and you can focus on an area that you are truly an expert in.”
Trust Is Earned
For Jamie Letcher at Summit Financial Advisors in Madison, Wisc., the single biggest regret was something simple but profound.
Early on, he told a prospective client, :Trust me."
“It was the wrong thing to say,” he explained. “Trust is earned.”