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Advisor Blunders: Are You Making These Mistakes?

You’ve got a lot to manage as an independent financial advisor – your team, your clients – not to mention client portfolios. It’s easy to overlook some common trouble spots for advisory firms that leave you and your practice vulnerable. Make sure you’re not making the following practice management and technology errors:

1.    Failing to use secure passwords for mobile devices.

If you rely on a smartphone or tablet, you’re making a big mistake not using a secure password, which includes multi-factor authentication, to protect your online accounts. Imagine leaving your phone or tablet in a taxi. Think what might happen to your client account data if identity thieves suddenly had access to your email. “Advisors make this mistake because they think secure passwords are inconvenient,” says Neal Quon, of Quon Warrene, a technology consulting firm specializing in the financial services industry.

But these days, it’s easy to secure your data with reasonably-priced or even free password managers. Quon recommends LastPass, RoboForm or 1Password that let you pick one password to manage a list of encrypted and secure passwords for each of your devices and programs. Each of these programs makes it easier for team members to remember passwords, while ensuring that sensitive data stays secure. As Quon points out, with recent news reports of customer account breaches at Target and Home Depot, this is more important than ever.

2.    Confusing a client’s goals with their money.

This one is a bit tricky, admittedly. You’re a financial advisor, not a life coach, after all. But the truth is, clients’ biggest issues often go beyond their money. And smart advisors are delving into these broader issues. “Clients’ goals are more complex than what they may have been historically,” says Vince Crivello, vice president of practice management at Loring Ward. “[But] advisors still tend to focus on what they get paid for: managing money.”

Clients are worried about their health, their relationships, and their legacy aspirations, Crivello explains, adding that he’s seeing innovative advisors tackle these deeper client goals with seminars on wellness, exercise, charitable giving and legacy planning. “I’m not suggesting that advisors buy couches and play whale music,” he says. “But they should look at what’s keeping clients up at night. They might be worrying about their elderly parents, or their kids and grandkids, or even the transition into retirement, which changes people’s identities. It’s about understanding the whole client.” Crivello says. Advisors can use this holistic approach to provide better financial plans. In one case, a client was considering co-signing on a $650,000 loan with a son-in-law that would have dramatically reduced the client’s financial options and the success of their financial plan. Knowing about this relationship between this client and their adult children gave the advisor an opportunity to suggest better alternatives.

3.    Hosting boring client events.

These days, as mentioned above, appreciation events should focus on the “whole client” – not just their money. After all, while clients want insight into how you manage their financial lives, they do not necessarily want to become the expert themselves. That’s what they hired you for, after all! And that’s why events that are too money-focused (especially when you bring in a jargon-heavy “expert”) will not be greatly appreciated – or long remembered.

Crivello recommends regular client education and appreciation events that help clients in non-financial areas – and that integrate with an advisor’s own hobbies or passions. One advisor who loves food, for instance, hosts a monthly appreciationdinner at a different restaurant for eight client couples. Another advisor likes the local minor-league baseball team, and regularly takes clients out to see games. In the D.C. area, an advisor with Japanese heritage rents a couple of buses each year to take clients and their families see the famous cherry blossoms at the Capitol mall. The possibilities are endless. An advisor with small business owner clients takes clients on winery tours. Whatever your passion, whether it’s camping or mountain biking – or chocolate – it can become a great client appreciation event opportunity – especially for clients who enjoy the same thing. “Client appreciation events shouldn’t be work for advisor,” Crivello concludes.

If you find yourself with poor password security, a money-only planning approach, or dull client events … try some of the ideas above. See if correcting your mistakes can make a big difference for your business and your clients.


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