You’re convinced of the value you bring to your clients. Are they? With all the online services, do-it-yourself investment platforms, robo-advisors and industry analyst insights available at their fingertips, some may question why they’d pay an advisor to invest their money for them.
You may have encountered such objections from prospects and even some clients, but it may have been when market volatility was relatively benign. Then, entered the year 2020 with a pandemic, staggering unemployment, political upheaval and a stock market that responded in stride.
It’s in times of uncertainty that the benefits of an advisor can especially shine. Still, the value you bring to the table throughout a client’s entire investment lifecycle should not be understated.
Value Goes Beyond Finances
Can someone generate higher returns on their investments without using an advisor? Possibly. But what many fail to consider is the value and potential gains that come from a collaborative approach to investing.
Most advisors have the benefit of gauging market performance over time, assessing historic trends, and combining the knowledge gleaned from multiple portfolio scenarios, client situations and outcomes. These insights may prove invaluable to the average investor and help them make better decisions based on advice that’s tailored to their individual needs and risk tolerance — a far cry from the one-size-fits-all approach that’s often found online.
In general, advisors also understand when it makes sense to stick things out even as market volatility triggers an urge to run for the exit sign. It’s during these times that advisors may add the most value, helping clients maintain a level head to keep their goals and long-term objectives in sight.
Managing Emotions and Assets
When responding to skepticism over the value that an advisor lends to an investor, it’s important to not just portray yourself as someone who selects and manages assets. Instead, it’s vital to earn trust as a behavioral coach who is there to guide clients and help them avoid irrational decisions and mistakes, such as chasing short-term gains or panic selling in down markets and locking in losses.
And managing emotions involves much more than helping clients respond appropriately to market volatility. Other life decisions may benefit from the perspectives of an advisor, too, such as the optimal time to begin claiming Social Security benefits to maximize monthly payments, downsizing a home, estate planning, 401(k) rollover options and much more.
Another area where advisors offer insights is in regard to tax implications. While tax advice should be reserved for tax professionals, there are many strategies that may bring added value by managing investment taxes and avoiding unnecessary penalties.
The steady and grounding presence of an advisor during market mayhem and major life decisions may not only offer potential financial gains compared to a DIY approach, it might also bring peace of mind — something that may be as compelling as monetary worth.
It’s generally understood that, even though there is a cost to do so, clients may experience a financial benefit from working with a financial advisor. For most, however, the overall value of an experienced and qualified investment advisor goes far beyond that.
Communicating these principles effectively to your clients may not always be second nature. To help, we’ve developed several Behavioral Finance resources you can use to understand the psychology behind typical financial fears and, therefore, form deeper connections. Be sure to access these complimentary resources below.