Improving Financial Advice

What is the financial advisor’s role?  There are several possibilities.

  • Educator
  • Coach
  • Parent
  • Leader
  • Assistant
  • Technician
  • Reporter
  • Counsellor
  • Judge
  • Arbitrator
  • Encyclopedia
  • Traffic director

Likely all of them.

To be a worthy financial advisor, one must add value.  To do that, an advisor must be aware of their role and how that creates value for their client.  It is a subtle problem.  Some advisors are multi-dimensional, others more confined.

Is there or can there be an all encompassing vision of the role?

It will be different for each, but I think the idea of coach comes closest.  Not the coach of a football team, more the coach of a golfer or tennis player.  Something more personal.  Something where results are clear and connected to the efforts of just the player.

A coach can educate as needed, can require discipline and effort as needed, can refocus direction, supply details and both promote and explain the player to others.  They can be the confidant where personal hopes, fears and expectations can be discussed and prioritized.

To be a good advisor it is important to know the technical material but interpersonal skills make the difference.

This leads us to an interesting conflict.  Will efficiency make you better?

Some aspects of the job will benefit.  Like reporting and technical skill, but some like counselor and even coach will suffer.  I know of one large company CEO who was criticized for his inability to behave like a farmer.  Apparently planting corn and then standing beside the field shouting “Grow!!!” is not a useful tactic.

Urgency, like price, is a subset of efficiency and is usually a poor metric.  Financial planning connects to a very long term relationship with ambiguous and fuzzy ambitions.  Efficiency tends to work against that.  How do you, efficiently, get to know someone’s deepest thoughts and emotions?  Will an online purchase of a low-priced ETF address any of these?

Advisors today must compete with do-it-yourself with online support.  You cannot out-efficient those.  Perhaps the true goal of the advisor is to be a wise man (woman.)  To help another reach their required or preferred goals.  To know and communicate the way as amended by the client’s needs and circumstances.

At the same time efficient order entry, tax reporting, form processing, security, portfolio management and communication are a must and they must compare well with the online world.

Good financial coaching is not based on command and control.  It is based on influence – the ability to show a client how to work at their peak ability for their own interests.

Good advisors are complicated beings.  Getting better is the work of a lifetime.  Efficiency will help, but it cannot be the only goal.

Don Shaughnessy is a retired partner in an international public accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. Contact:  

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