• Sun. May 26th, 2024

5 Traits of Successful Financial Advisors

The financial advising industry typically defines success as having a large book of client business and a track record of performance and good service. But what gets you there? What characteristics separate good financial advisors from the bad, the successful from the unsuccessful? We talked with Valerie R. Leonard, CEO of EverThrive Financial Group in Birmingham, Alabama, and one of Investopedia‘s 100 top financial advisors, to help us examine what it takes to succeed in this changing industry.

“When I’m in a room with the top financial advisors across the nation, there’s a clear indication that they … wake up most mornings asking themselves what they can do to better their client’s lives,” Leonard told us. “I’m a firm believer that the money will come if you do right by your clients, and that has been true throughout my career.”

Whether you want to become a financial advisor or simply need to hire one to help with your financial planning, here are five traits that most successful financial advisors have.

Key Takeaways

  • Getting clients and having them stick with you and then later recommend you means putting them first.
  • Meanwhile, you must have a deep understanding of the markets, analytical skills and training, and a passion for finance.
  • Soft skills are as critical as hard skills, like investing skills and market timing.
  • Successful advisors are more than good with numbers. They have a passion for the subject and are curious about their clients and the changes in the industry.

1. Passion for Financial Planning and Wealth Management

Thriving financial advisors are those who have a passion for the subject. In a field where standards, laws, strategies, and products constantly evolve, passion is the fuel that keeps you learning more each day.

This passion will make you eager to navigate a financial world that is very different from a few decades ago. Clients have access to a wealth of financial information and the ability to trade instantly on it but may lack the experience to do so wisely. Financial advisors must be prepared to answer questions on both established and emerging investments.

You’ll need versatility in your knowledge of products and in the kinds of clients you’re prepared to serve. In addition to individual clients, Leonard’s firm manages corporate retirement plans and provides financial education to employees at all levels, from entry-level workers to C-suite executives and business owners. “This allows us to offer advice to a wide range of individuals with varying circumstances,” she said.

Advisors with a genuine enthusiasm for finance will gravitate toward continually learning and keeping pace with industry developments. Those without that passion consistently fall behind and struggle to keep up. That can make the difference between success and failure as a financial advisor. A good question for financial advisors in every conversation is, “What’s new in the industry?”

2. Deep Analytical Ability

This trait is best known among the public and prospective advisors working through licensing exams. A competent financial advisor can help clients with cash flow retirement, investment, insurance, estate, and tax planning. Having in-depth analytical ability across all these areas is essential, but it is most important in the investing portion.

Successful financial advisors know that the risk-return ratio drives almost every aspect of a financial plan. Properly structuring an investment portfolio and reallocating the assets as time and goals change is crucial. A financial advisor needs to be able to analyze and plan a portfolio in the context of various metrics, such as standard deviation, beta, strategic asset allocation, tactical asset allocation, and drawdown.

From their analyses, financial advisors can implement proven strategies while investigating newer options appearing on the market. This doesn’t necessarily mean picking the safest and most advantageous strategy, but it also doesn’t mean taking unnecessary risks with clients’ money to test a theory or allocation.

3. Ability To Market Yourself

This is a key requirement for successful financial advisors who have to grow their book of business to thrive. Selling their services across the entire spectrum of financial planning, from investment management to estate planning, is necessary for financial advisors to succeed. Granted, sales of services or products shouldn’t be made only to add to a financial advisor’s bottom line. The service or product must genuinely help the client.

Nevertheless, marketing your services is necessary. A financial advisor must be able to communicate to potential clients the gaps in their financial plans and ably convey the solution to get their business. A financial advisor who can’t muster up the courage to ask for business will undoubtedly get none.

“The most successful financial advisors are generally less concerned with gathering assets and selling products, but instead focus on their client’s needs and goals,” Leonard said. She says successful advisors take a client-first approach. When they do, she said, “they are better able to position their clients for success and create meaningful financial planning strategies that incorporate the most appropriate products for their client’s specific situations.”


The long-term job growth rate for financial advisors from 2022 to 2031.

4. Putting a Client’s Interests First

Successful financial advisors prioritize their clients’ interests over their own. Selling clients unnecessary products, such as irrelevant insurance policies or those with too much coverage, is unethical and could have legal repercussions.

In addition, charging higher-than-necessary investment management fees is not good practice. A successful financial advisor shouldn’t charge 2% on assets under management when 0.5% is more typical for the same service. Successful financial advisors help people and are compensated fairly; they don’t drain their clients of their hard-earned money.

This means certain investments, such as mutual funds with high sales loads, should be avoided when there are countless comparable and better mutual funds without them.

“Rarely a month goes by when a prospective client walks through my door and hands me their account statements, revealing highly commissionable products that aren’t necessarily suitable for them,” Leonard said. “In these situations, I often wonder whether their previous advisor was putting the client first, they were looking for a big payday, or they had a sales manager breathing down their neck.”

Leonard passed on guidance that helped her early on. “The best advice I received when I first got into this industry back in 2002 was not to focus on making my friends and family my clients but, instead, to focus on making my clients my friends and family,” she said.

Leonard said a client-first approach benefits both the client and the advisor. By prioritizing the client’s needs, advisors can build a strong reputation and gain potential ambassadors for their services. “The benefits to the client of a client-first approach include lower fees, frequent communication, a focus on long-term returns, suitable products and services, and a relationship that is based on the client’s personal values, goals, and needs,” she said.

This approach fosters trust and prospects for growth through referrals from satisfied clients.

5. Curiosity

Uncovering precisely what a client needs across all aspects of financial planning is like detective work. Small details must be found and pieced together, and a comprehensive solution to a large problem must be created and communicated. Successful financial advisors enjoy this process and thrive on the challenge.

They are thus curious about their clients, not just when first gaining their business but in an ongoing fashion. “Successful financial advisors … take a genuine interest in their client’s lives,” Leonard said. “I also often hear from prospective clients that they haven’t heard from their advisor in quite some time. In my opinion, if the client truly comes first, their advisor would be in regular communication, educating them each time they talk, making sure they are comfortable with the strategies in place, and checking in to be sure the client’s needs or goals have not changed.”

What Are the Hard Skills of Financial Advisors?

Some of the hard skills required to be a financial advisor are research skills, wealth management knowledge, understanding of complex modeling programs, and some higher education.

How Can I Be a Good Financial Advisor?

Being a good financial advisor will come to a few key performance measures. Of course, you are required to act lawfully. Your client will generally have a specific financial goal in mind. This isn’t always about maximizing profit, and as long as you perform your duties for the client in the correct way, they should be happy. This becomes more nuanced, however, if there is a market downturn or macro event you could not anticipate that negatively affects your client’s portfolio, and your client believes it is your fault. For this reason, it is a large part of your job to make sure you are communicating proper expectations with your client.

Is It Hard to Be a Financial Advisor?

It can be difficult to become a financial advisor if you lack two key traits: the ability to deal with clients, and a thorough understanding of all things finance. You could be the best financial planner in the world but if you are terrible with your clients, they will transfer to someone else who may not do as good of a job, but who they are much more comfortable with. Financial advisors should not underestimate the soft skills required.

The Bottom Line

Successful financial advisors know not only how to manage their clients’ money, but how to ensure their clients feel safe and financially cared for. Although the barrier to entry can be high, financial advisors can enjoy a healthy salary and fairly stable employment. There is an element of marketing when it comes to landing new clients, which is why serving your existing clients well is key, as they often bring in profitable referrals.

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