The role of a financial advisor means many different things. Advisors take on the responsibility of guiding their clients through building an asset portfolio, helping them improve their personal financial situation, and being available as a lifeline in the event that things are crashing down in their lives. Advisors are often seen as a fix-all for every problem that clients can think of, especially in times of uncertainty like Americans are experiencing during the COVID-19 pandemic, as well as the ongoing Black Lives Matter protests. This is why great financial advisors can come at a cost. Here are some of the biggest challenges facing the modern-day financial advisor.
Keeping Up to Date
Advisors are managing the asset portfolios for many of their clients. They need to stay on top of the business news and react quickly when a change occurs. An example of this would be a scandal at a well-known company, which is an indication that their stock is about to quickly plummet. When something catches their eye, advisors need to relay the news to their client in as clear a way as possible. Then the advisor will need to recommend a course of action to better protect their client’s money. The client is relying heavily on them, making it a high-stress job.
Millennials are now young adults, and many are becoming interested in making and saving money. However, this generation grew up differently from the one before them. Many millennials were raised by being handed out allowances and did not learn the value of money. When they wanted to buy something, they would simply take out a loan and spend years paying it back with interest. Changing the mindset of a person who has an established routine in place can be very difficult. Young people want to know the ‘get rich quick’ schemes and refuse to believe that success comes after hard work.
Separating Emotions from Logic
Financial advisors likely got a job in their field because they think in terms of analytics and reason. They leave their emotion at home and are simply focused on the best use of their clients’ money. Some of their clients can be difficult to handle because they make their decisions solely based on emotions. For instance, if a client suddenly lost their job, they might be extremely upset. They could ask their advisor to sell all their investments and withdraw everything. An advisor needs to be able to calmly assess the situation and talk the client down. They would look over all the scenarios before recommending the best course of action for their client.
Lower Fees as Competition Rises
Financial advisors work long hours in order to achieve success for their clients. They spend a lot of time getting to know the client and then setting up their investment portfolio for them. They often do not see any revenue until the commission fees are deducted. These fees are usually based on the current interest rate, which has been very low recently. Firms have been lowering their advisors’ rates in order to entice customers to do business with them. However, it has resulted in very overworked and possibly underpaid advisors.