The job of a Financial Advisor is multi-faceted. The ultimate goal is preserving a individuals net worth through a series of actions and money management strategies which may or may not include budgeting, tax planning, insurance, retirement and estate planning, and investment advice and guidance. Each clients needs are individual and unique so a financial plan could include any or all of those components or maybe something completely different customized to that client.
It is up to the financial advisor to identify those needs in a clients financial situation, and to pass the information onto the client in a way they can best understand. This takes a large amount of communication skills, as well as compassion and understanding of many different peoples financial situations. Financial advising does not only consist of allocating large amounts of money for wealthy individuals or families, but understanding people’s situations and making the appropriate recommendations.
In that sense I think that good communication skills, as well as compassion and empathy are the most important characteristics a financial advisor can have to be successful in this industry. Although many people of high net worth seek out financial advisors to manage their wealth, just as many people facing bankruptcy or financial hardships will seek out the aid of a financial advisor because they are in a situation they cannot manage without help. In those cases, it is vital to be able to prioritize and calculate what is the most tax effective course of action for this individual’s situation. A financial advisor must be able to work under pressure and make those decisions that could make all the difference in a bad situation, whether it is advising them to pay off their loans first rather than saving, or if they need to purchase life insurance to protect their assets, even though they are having financial troubles, these are decisions that they need to make and be able to clearly pass this information onto their clients so that they can understand.
Trust is a huge issue with financial advisors; the skill is to get someone to trust you to open up about their financial situations. May people do not like sharing that information and are uncomfortable talking about money. Many time people will come to an advisor seeking advice on a particular subject and do not disclose their whole financial situation. For example, someone might come in seeking help paying off their loans or student debt, but will omit that they are currently being foreclosed on, or filing for bankruptcy because they do not think these situations are related or do not want to share personal or embarrassing information. As an advisor you need to know the scope of the situation before giving advice, and in order to do that you need to have the skills to convince the client to trust you and disclose their information to you.
Although soft skills and personality are extremely important when you are dealing face to face with clients everyday, just as important, if not more are the actual analytical skills that are behind the scenes. You need to be back up your likability with actual results. With so many personal financial planning apps and websites out there, if you are charging for a service, you need to make sure you do actually have the highest possible returns and tax advantages you can offer. You should not simply take a persons portfolio and put it into index funds or the target retirement funds, you need t make sure you are educated enough and able to build sufficient portfolios for each of your clients to actually satisfy their needs in a proactive way. Most people don’t have a full grasp on their monetary issues, from my experience people think that they are prepared based on the 401k and life insurance they receive from work. In fact statistics show that about 40% of Americans have no life insurance at all. Statistics show that the higher your income, education and age the more likely