What do Financial Advisors actually do?

A very common question we all get when meeting new people is, "what do you do?" or something along those lines. I get it all the time, and honestly, I sometimes struggle with what to say. The obvious answer is, "I am a financial advisor". The issue with this response is the follow up questions I usually get. Here are some examples:

• "Oh great so you invest people's money?" - While this one is true, it is only a fraction of the story. Many advisors spend A LOT of time on this - picking stocks, mutual funds, ETFs to buy for clients. Luckily, we have our own internal team that handles all investment-related topics. I spend very little time on this as a result, which is hard to fully explain in an introduction conversation. I am speculating here, but I think most of the general population thinks we spend MOST of our time as advisors on investments.
• "So you sell life insurance?" - This is also true but again, it is a very small piece of the pie. Many insurance brokers market themselves as financial advisors which is massively confusing to anyone outside of our industry (topic for another time).
• "Got it. You help people plan for retirement?" - I'm actually not a believer in 'retirement' as it has been generally defined in our culture. The definition seems to be you stop working one day and you are done forever. *For-ev-er!* I think in most cases this results in negative (obviously unintended) consequences. Wether you love your job/career or hate it, it does gift you with a sense of purpose which is very hard to replace with golf, fishing, or generally just hanging out.

I don't think this problem is industry-specific either. If someone who I just met said they were a doctor, engineer, accountant, attorney, etc., I would instantly begin thinking of my pre-conceived notions of what they do. I would probably ask follow-up questions they have come to expect as well. How many times do you think the doctor has heard, "Oh, you help sick people?". In reality, they could be an orthopedic doctor or optometrist. I may ask the engineer, "Are you an engineer designing roads and parks or another kind?". That's strictly because of life experience, as my father is a civil engineer.

I think you catch my drift here. In many industries and occupations there are generalities and it is important for us to be able to quickly distinguish what makes us unique and what we uniquely do.

Back to the main point, which is what do I think financial advisors actually do or should do?

1. Show empathy and gain influence: This is by far the biggest two pieces of what we do. Empathy: money is a tough subject for most people. At times it can get really ugly, especially when you are dealing with a complex family dynamic. If we can't bring ourselves to the level that our clients or prospects are currently at, we can't effectively do our job. This also involves actively listening so that you can show you really do care and help to identify otherwise hard to find clues your clients and prospects may leave. Gain influence: This is crucial. We could have all the technical knowledge in the world to solve issues for our clients, but what good is it if we can't influence them to move to action or change? This part of the pie comes with a heavy 'handle with care' label.
2. Proactive outreach and client meetings: Probably a bit more mainstream here. PROactive outreach is the item I will focus on. I don't mean reaching out to clients prior to a market pullback. I mean reaching out with your ONLY intention being to see how they are and what is going on in their life. Send a handwritten note for an anniversary, send flowers for a birthday, all of this builds trust with our clients and shows we really do care.
3. Creatively adding value: Obviously being hired as a family's financial advisor there would be an expectation that value would be added. Otherwise there is no point in paying for one. Generally, the average person could find a MUCH cheaper alternative to managing their money. It is the 'outside of the box' value creation that will make an advisor stand out. Here are some examples:- Helping a client who is selling their business get hooked up to a great business broker, exit plan consultant, M&A attorney, estate planning attorney, or therapist for the stress.- Helping a client with an aging parent to get them into the best and most cost effective care available.- Finding a business owner an opportunity for synergy with someone in your network.- Acting as a consultant and confidant to a widow or son or daughter who just lost their spouse or parents. Subsequently helping settle the estate matters which can be tedious and painful.These are just a few examples of things that fall outside of our general engagements with clients as their advisor. We believe it is still important to do all these things which add a ton of value.
4. Develop financial plans and implement solutions: We do spend a bit of time developing financial plans for clients. However, once they are produced, they turn to maintenance mode as life inevitably changes. It is really important to continually update your plan so that there are set goals and hurdles you are striving for. It gives money decisions direction which is a powerful thing. With all that said, unless an advisor is still in the stone age, financial planning is a prerequisite for clients in 2023. Integrating those solutions which are identified from the financial planning process is also very important. This goes back to having influence with clients. Sometimes the solutions aren't fun. Sometimes you have to have tough conversations about death, disability, and spending habits. If we can't influence clients enough to make major change, these solutions are simply ideas.
5. Talking investments and markets: I read every day and stay up to date on what is going on in the markets and the economy. I will say it is probably around a half hour or an hour per day depending on the level of panic in the general population. Markets and the economy are completely out of our control. We can certainly try to make minor tweaks to portfolios when we see opportunities, but making wholesale changes on a hunch is generally bad and dangerous practice.

There are plenty of advisors out there who spend a much higher percentage of their day on researching the hottest stocks. If that's your thing - I'm not your guy. I want to keep clients updated on important topics, but I also don't think people really care.

I want more time to focus on what people do actually care about which is their family, their business, and their ability to lead full and healthy lives.

There is a lot in our world that is commoditized. With the rapid pace of developing AI, there is certainly more that will be commoditized in the next 5-10 years. What will never be commoditized is the human to human connection. You can't replace it with an algorithm. That's why I believe 80-90% of what financial advisors do isn't tied to technical items. Advisors DO NEED plenty of technical skills to be able to do our jobs effectively and find the right solutions to our clients' problems.

My concern is that I'm not sure how far away we are from a client being able to type in their problem to an AI chatbot and that chatbot developing passable recommendations...

This is a massive future threat to financial advisors, but only to the ones that rely heavily on information and knowledge over the human connection.

So what do financial advisors ACTUALLY do? It depends (like most things in our world). What I know for sure is that some advisors who read how I view our daily work functions will wildly disagree with me. That's okay because there are plenty of folks out there who need help, and no one person wants to be helped the same.