Common Mistakes New Advisors Make – Ones that Could Ruin Your Business
There are many pitfalls to face when you’re first starting out as an advisor and mistakes are easy to make. Look out for these potential mishaps because they could halt your business in its tracks before it even gets off the ground.
1. Failing to talk to clients on their level
Inexperienced financial advisors often succumb to what is known as the ‘curse of knowledge’. We’re not saying it’s wrong to have great product knowledge, it’s most certainly an essential. It’s rather what you do with that knowledge that counts.
Clients do not want to listen to jargon, and really aren’t that interested in the numbers. They’re far more interested in how you come across to them in terms of your personality, confidence and ability to empathize with their goals and pain points.
Don’t overload clients with complex investment terms in the mistaken belief that they will be impressed. Far from it. What you’re actually doing is confusing them and preventing yourself from building a relationship with them.
2. Underestimating smaller clients
When you’re new to the industry, it’s all too common to chase after million-dollar assets without even considering smaller less wealthy investors. However, these clients need high quality financial advice too, and when you’re first starting out smaller investors can offer you a chance to hone your client relationship skills.
The advantage of starting out with smaller clients is that they are less likely to be as demanding as larger clients, giving you the breathing space to raise your game.
Keeping smaller clients happy can also act as a stepping stone to acquiring higher net worth clients in the future. If you perform well you will earn references and gain in confidence and – occasionally – smaller clients could themselves turn out to be bigger players who’ll stick with you in the longer term.
In any case there are plenty of advisors who specialize in middle-class and younger investors who have yet to amass sizeable assets. When it comes to advising smaller clients the issue is to balance making a profit while still meeting clients’ needs.
3. Failing to have an ideal client profile
Here’s another typical error that could quickly lead to career failure. Too many new advisors practice indiscriminate prospecting. While it’s important to pick up the phone and try to arrange as many appointments as you can, if you don’t’ have a target market in mind, your marketing efforts will be ineffective and you won’t convert enough prospects into clients.
So before you do anything else create yourself an ideal client profile.
Determine the characteristics your ideal client should have, and why you are particularly suited to offering them financial advice. For example, do you have background experience in healthcare? In that case you should have a good rapport with health-care professionals.
It’s difficult when starting out to turn away any new business, but being disciplined about the clients you serve will pay off in the longer term. You will be able to develop a marketing message that will resonate with a specific market, enabling you to become more marketable and referable.
Advisors who serve niche markets have a competitive edge on those who don’t and in an increasingly crowded marketplace niches can be a life-saver.
And be aware that the number one reason Advisors fail is that they don’t see enough people! You build your business when you are sitting knee-to-knee. Advisors don’t make money on incoming calls. Get out there and mix it up.
When you’re starting out in any profession it’s hard to assess the obstacles ahead, so it pays to be open to advice. Take note of our tips and give yourself a head start.
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