If you’re thinking about becoming a financial advisor, it’s important to understand the profession’s role. The job requires someone with a lot of knowledge who can help clients make decisions about their money.
Financial advisors are often employed by banks or other large institutions and work directly with customers to help them set up financial plans and goals based on their needs and risk tolerance. They also guide clients through making investment decisions, estate planning, retirement strategies, and insurance purchases; life insurance, for instance.
Alternatively, some people choose to become independent advisors who operate outside of these larger organizations. These individuals may have their websites where they sell products like mutual funds or manage portfolios for individual investors online via computerized trading platforms like Wealthfront or Betterment — but this is incredibly competitive, so getting started could prove difficult unless you already have some experience, under your belt!
But over the years, the landscape of financial advisory has begun to shift. While demands for financial advice are still rising, what people expect from a financial advisor has changed significantly. It is no longer sound financial advice but personalized financial advice that people seek.
Now, this can be off-putting because between watching markets and doing research on a national scale, financial advisors have to cater to every single client’s whims. This is especially difficult because personalized financial advice isn’t something that’s taught in courses that train financial advisors, not yet anyway.
And the pressure mounts infinitely. But this isn’t about why I quit being a financial advisor. This article intends to focus on the challenges associated with being a financial advisor in this day and age.
Table of Contents
Finding New Clients Has Become Harder Than Ever
In 2022, financial advisors will have a harder time finding new clients. The fact that you’re reading this article is evidence of how much the world of money management has changed. In the past, people were less educated about their options, and they didn’t know where to turn for help.
Nowadays, there are plenty of resources available on the internet—and more coming every day—so it’s easier than ever for your clients to research their situation and make an informed decision about what kind of advice they need.
Additionally, consumers today want more from their advisors than ever before: they want honesty, transparency, and accountability; plus, they expect them to deliver solutions tailored specifically to their needs rather than one-size-fits-all strategies based on outdated benchmarks or averages that may not apply in their specific situations.
As a result of these new demands from clients and no doubt others, many financial advisors have decided not only does being an independent advisor no longer make sense for them but also that it never did! Some former IARs have even gone back into full-time employment at large firms because that’s where all those additional resources are now located, so there’s no need anymore for “outside experts” like us.
Generating Leads is Expensive
One of the biggest problems you’ll face as a financial advisor is the way you will have to market yourself. In the past, it was simple—you got a job at a firm, and they handled your marketing for you. You could focus on selling rather than spending time on lead generation.
Nowadays, though, financial advisors need to be great at generating leads and managing their marketing strategies because there are so many other independent advisors who can do what they do but with less overhead cost—a huge disadvantage when operating in an industry where margins are already slimming down due to increased competition from big banks and insurance companies buying out smaller firms. And that’s happening at an alarming rate.
So how does one generate quality leads? There are many ways: digital advertising (Google Ads), social media (Facebook & Instagram), and email marketing campaigns, but these all cost money! This monetary requirement is hard on financial advisors who have risen from working-class backgrounds, especially because it means the barrier to entry is something that’s out of their hands.
Marketing is Being Done Digitally
The digital world is growing at a rapid pace. The average consumer spends about five hours each day on the internet or watching videos, with most of this time spent on smartphones. This trend will continue in the coming years, and financial advisors need to keep up with these changes to reach prospective clients.
The best way for you to market yourself as an advisor is through digital platforms like Facebook Ads and Instagram Stories. Digital marketing costs less than traditional methods like TV ads, newspaper ads, and billboards which are still popular but increasingly becoming obsolete.
Most importantly, though: it works! Marketers can track how many people visit their website after seeing an ad online; they can tell if someone clicked through from one page on their site to another; they can even see which types of people visit certain pages most frequently—all things that were difficult if not impossible before widespread access internet became commonplace in homes around the 1990s onwards.
The Industry Is Getting More Competitive
One of the most common challenges for many financial advisors is that their industry is getting more competitive. More people are starting financial advising businesses than ever before. More people are becoming financial advisors, too.
Additionally, there’s new competition from tech companies like Betterment and Wealthfront that provide automated investment services to consumers who want to manage their own money without paying a financial advisor in the traditional sense.
Fintech startups such as Acorns also provide automated investment services that are much cheaper than traditional advisory services offered by a human being who can charge thousands per year. Banks and credit unions have also gotten into the act by offering digital advice platforms with lower costs than what’s typically charged by independent advisers.
Good Communication Skills Are Becoming Even More Important
As a financial advisor, you will have to be able to explain complicated financial concepts in a way that your clients understand. You also need to listen and ask questions so you can find out what your clients want. This will allow them to feel comfortable working with you.
Financial advisors need to negotiate with their clients and the financial institutions they work with on behalf of their clients. This means being able to discuss rates, fees, and other details before agreeing on anything final so there are no surprises later on down the road.
When it comes time for payments or other decisions that might affect both parties involved in these types of agreements, such as annuities or insurance policies purchased from different companies offering similar products but varying coverage amounts depending upon factors like age or health status, financial advisors need to be able to help their customers discern what is best for them. And this requires a great deal of communicative power because investors may not be convinced simply by the numbers.
Bottomline
It’s a great time for financial advisors to invest in digital marketing and training in customer service to stay competitive. In the past few years, there has been an explosion of tools that make it easy for small businesses to leverage social media, websites, and blogs as part of their marketing strategy.
A good website can have a dramatic impact on your business by driving new leads from search engines like Google or Bing. Social media sites like LinkedIn help you connect with potential clients authentically while helping them see how qualified and experienced you are. And having a mailing list means that you can send special offers directly to your customers’ inboxes—often with discounts!
A blog is another powerful tool: It helps establish credibility among potential clients by showing them what kind of content matters most to you as an advisor; it provides valuable information about topics relevant to your industry; and—most importantly—it shows people how well-read or knowledgeable on current events, both financial and non-financial, that they can expect from working with you as opposed to just being another robot programmed into doing “work” at some point during each day.
About Carson Derrow
