How, exactly, does a financial planner get to the top? Investopedia canvassed some of the best investment business minds in the United States for some good, solid advice, and here's the formula they advise financial planners to use to become top advisors:
David Molnar, a managing director at HighTower San Diego financial services firm, says advisors have to figure out who they want to be. "Decide whether you are going to be a wealth advisor or a portfolio manager," he advises. "We define a wealth advisor as someone who takes a holistic, planning based approach, designs appropriate asset allocations and then outsources the day-to-day investing to money managers, either via separate accounts, mutual funds or both. A portfolio manager is focused more on the asset management process and will perform the security selection of a given portfolio in-house."
Molnar says there is no right or wrong answer to the question, as there are many examples of successful advisors that adhere to one of the two disciplines. "But the reality is you cannot do both effectively," he adds. "If you're just starting out in the business or looking to break into a career as a financial advisor/planner, there really only is one choice. You don't have time to be an effective portfolio manager and market yourself to new prospective clients."
Define Your Target Market
Molnar also advises wealth management professionals to get to know the common needs and concerns of their target audience and then become an expert in solving these problems. Take the following direct steps, he says:
- Attend industry trade shows and networking functions.
- Meet the professionals that serve this community.
- Make yourself visible to them. Know the marketplace inside and out. Who are the players? Who are the ones to avoid?
"The more often you are seen at various events and networking functions, the more you will be viewed as an expert by others," he adds.
Be Prudent in Selecting Your Business Model
Wayne B. Titus III, a fiduciary, fee-only, advisor at AMDG Financial, a Plymouth, Mich.-based wealth management firm, says advisors must determine how they can best serve their clients. "My choice is to serve from a fiduciary, fee-only perspective," he says. "As a CPA, my professional code of ethics states that I should be independent in fact and in appearance. I believe that as an independent Registered Investment Advisor (RIA), my firm is best positioned to allow me to serve my clients from the most independent and objective perspective."
Always Be an Objective and Independent Advisor
Titus says that wealth managers can provide advice that comes from a different perspective and clients need clarity on where you're coming from. "You are working with your client, toward supporting their goals and objectives, with no actual or perceived conflict of interest," he says. "They clearly understand the level of responsibility and compensation you receive for the work you do. They can evaluate the actual cost and benefit of the choice they have made."
When investors understand that you owe them a duty of loyalty and are held to the highest standard under the law, many benefits begin to accrue to your practice, Titus adds. "Prospective investors, with an interest in having their wealth prudently managed, begin to choose you over other alternatives in the marketplace," he says. "They become clients and recommend and easily introduce you to their family and friends. Referrals are the norm; relationships last for many years, through multiple generations."
Be a Multi-Tasker
Minoti Rajput, a certified financial planner with Southfield, Mich.-based Secure Planning Strategies, says that having some variety in your advisory practice is a key to rising to the top. "Have more than one area of specialty, as doing the same thing and working with the same type of clients may get tiring," says Rajput, an industry veteran.
She also advises staying in touch with other financial services professionals on a regular basis. "Learning and sharing ideas from each other is wonderful; leaning on each other in times of stress is even better," she adds.
The Bottom Line
All our experts added that the best advisors love what they do for a living and are equally effective as sales professionals as they are as investment professionals. They say that elite advisors regularly establish client acquisition goals and have a finely honed client acquisition process, built on a pipeline of leads, referrals and sales opportunities culled from that strategy.
The so-called "advisory elite" also tend to possess multiple impressive credentials, such as stacking a Masters degree in finance on top of a Certified Financial Planner (CFP®) title. Clients love experts, and the more credentials an advisor has, the better the perception to potential clients.
All of the above don't represent the only attributes that separate the average from the elite, but they're at the top of the list of wealth managers that have risen to the top of their professions, and they want you to do the same.
If you are looking for more information about how to become a financial advisor, Investopedia's Ask an Advisor tackles the topic by answering one of our user questions.