The financial advisor industry is rife with pitfalls that many financial advisor professionals may be unaware of.  If you aren’t careful, you’ll make one or several of these crucial mistakes, lose clients, and possibly even alter your career trajectory for the worse.  Let’s take a look at the top mistakes financial advisors must avoid in order to retain clients and grow their business.

Mistake 1: Letting Prospecting Grind to a Halt

If you stop prospecting or even slow your prospecting, your pipeline will become depleted.  Continue to prime the prospect pump and you’ll gradually move that many more opportunities through the sales funnel and convert them into clients.

Most financial advisors are experiencing an aging client base and a maturing book of business.  Both of which can have a negative impact on enterprise value.  Don’t be lulled by the fact that your revenue is growing every year.  If you’re clients are withdrawing more money from accounts than you are adding, then your business may be shrinking.

Mistake 2:  Not Treating Your Business as a Business

Financial Advisors have always been told “…its your business” even if the firm they affiliate with, doesn’t truly let them own the business.  It doesn’t matter which firm you are with, you should approach your financial advisor business as a business.  Run it with an end game in mind.  Your business may be your largest personal asset as financial advisory firms are selling for record multiples.

How do you run your business like a business?  It’s important to know what can increase value in your business.  Factors such as broker dealer affiliation, average client age, revenue growth rate, or product mix are some of the important variables.  If you are running a small practice with one or two people or a firm with 10 or 15 or more people, understanding the metrics that can add or even detract value from your business is important to know.

Mistake 3: Making Excessive Accommodation

Accommodating clients and prospective clients certainly has its merits, yet this approach is flawed when it is taken to an extreme.  Do not let clients and potential clients steer you in any specific direction.  If a client’s desires go against your overarching financial philosophy, remain true to your ethos.  Provide evidence-based arguments to counter aggressive or stubborn clients, focus on investments with a reasonable level of risk, and hold firm even if others keep pushing.

When in doubt, shift your perspective to consider the viewpoint of your client.  Make an effort to understand his or her reasoning, alter your response accordingly, and you’ll make meaningful progress.

Never be afraid to fire a client, most advisors will admit they should have fired a problematic client earlier.

Mistake 4: Overreacting to Setbacks

Even the best financial advisors make mistakes.  You, your team, and your clients will endure setbacks.  Recognize this reality and alter your mindset accordingly. Understanding this fact will help you from overreacting the next time a setback arises.  The more mistakes you and your team make, the better prepared you will be to overcome similar hurdles in the future.  Spend time with more experienced financial advisors and learn about the challenges they’ve overcome, as well as the mistakes they’ve made. Its ok to admit to clients you made a mistake.  They will be understanding and will appreciate the honesty.

Mistake 5: Assuming No One Else is Prospecting Your Clients

Your clients need respect, communication, and high-quality service.  If you were to ignore your clients, they might assume you aren’t working hard on their behalf and they’ll be tempted to see if the grass is greener elsewhere.  Even if you don’t have any important updates, reach out to your clients from time to time.  Your ongoing communications with also present an opportunity to make it clear you are always there for them if they have questions or concerns.

One of the biggest mistakes you can make is assuming a quiet client is a satisfied client.  If you haven’t heard from a valued client in a while, be proactive by re-opening communication and make an effort to check in with them.  Be outgoing and be prepared for a call or videoconference. Make sure to listen closely to what you client says and get a sense of where they stand.  Even an occasional call or email to a client has the potential to retain his or her business instead of letting another financial advisor swoop in and steal your client.

Mistake 6: Ignoring Technological Innovation

If you depend on your past success and make little efforts to modernize, the competition may surpass you.  Clients and especially prospects pay attention to how financial advisors use technology, including the latest tech innovations.  Embrace these changes and advertise them to prospective clients.

Regardless of your experience in this field, you should make an effort to familiarize yourself with the latest technology and investing tools and applications.  Learn from your Broker Dealer or RIA or Custodian.  These partners should be helping you advance your technological presence and helping you take advantage of the latest trends. Communicate your understanding and use of technology to your current clients as well as potential clients. Technology and the impact on client-advisor relationships are going to continue to evolve over the next 5-10 years as they have dramatically evolved over the last 5-10 years.  If you aren’t sure what resources are available, this may be the time to evaluate your existing broker dealer or RIA partner.

Consult With Bridgemark Strategies

Schedule a Consultation with Bridgemark Strategies, whether you are focused on enterprise value, technology or just finding a better broker dealer partner.

Our team is here to facilitate your broker dealer or RIA search.  Do not attempt to make this transition on your own.  Lean on our recruiters and consultants who have helped hundreds of advisors and have the collective knowledge and experience to guide you towards the optimal outcome.  Reach out to us today to schedule an initial confidential consultation.  You can contact us by phone at (704)288-4008 or on the web through our contact form.