As a financial advisor, you play many roles, you advise clients on how should they be managing their money, goal planning, which products should they be investing in for their short and long term goals, portfolio review, etc. The role of a financial advisor includes, but is not limited to the above, in fact the horizon is huge. Many advisors limit their scope and end up playing the role of an investment product provider. The idea behind writing this article is to demonstrate to you the need to look at the big picture, and have a holistic view of the client's profile and portfolio.
Amid the plethora of investment products and providers available, what's going to make you stay here for the long run is being irreplaceable. The investor shall look up to you with trust and must place confidence in your abilities. It is very important that we as service providers review our roles and responsibilities so as to align with the changing customer needs, and to ensure that you are always adding value to the investor's life.
So, here are some uncustomary and equally crucial roles that a modern day financial advisor must play for their sustenance as well as for an overall development of their clients:
>Financial Mentor: One of the most crucial roles to be played by a financial advisor is that of a financial mentor to his/her clients. The need of the hour is that you are your client's personal financial coach, teaching the investor lessons on the basics, like spending, saving and investing, guiding him through various facets of investing like Why to Invest? When to Invest? Where to Invest in?, etc. The idea is to stand by and lead your investors into a secure financial future while preventing them from making the most common investing mistakes that most people make.
>Imparting Financial Education: An advisor's job neither begins nor ends with "Sale". The sale should be there, but it is supposed to follow the various other important aspects, and one of the most vital elements among all is Educating Investors. Before you place your product basket on the table, it's essential to familiarize the investor with the fundamentals, the need for Diversification, Goal Planning, Asset allocation and Investment Horizon, Risk Adjusted Returns, etc. The Why must be taken care of before the What. When the investors have a clear head, it instills investing confidence in them, and it is good to have investors who are aware. You would not have to repeatedly spend time in convincing them for investing, they would understand the need and act as per advise. A lot of questions and explanations can be avoided later when the Why factor is catered to in time.
>Behaviour management: Another crucial aspect of financial advisory is managing investor behaviour. Actually a significant portion of this element is taken care of by the above point, "educating your investors". Investors are generally scared of volatility, a sudden rise or fall in the markets trigger their emotions, which is evident in their behaviour, and they tend to take wrong investment decisions. So, your role as an advisor is to hold the investors' hands and remind them that volatility is normal, the investor is here for the long run, that their life goals can be affected by a small wrong decision. There is a need to consistently stir their memory and revive the basics.
>Assessment of their needs: A financial advisor must have a broad perspective while dealing with their clients. Because of your knowledge and experience of the industry, you would know a lot about your clients' investment needs, their risk taking capacity, and investing requirements, sometimes you would be able to see their footing better than how they themselves would see. You should be able to perceive the risks that the client may face in the future. It is not just about explaining the importance of goal planning and investing to them, you must help the investors identify their goals. You must have that foresightedness, so that you can advise them for what is right for them, and not what they ask you to do.
>Holistic View: As an advisor you need to have a holistic view and offer comprehensive solutions to the investor. It is very important that you not just concentrate on the investment under consideration but also take into account his past investments, his business, job prospects, personal preferences and family needs, tax matters, etc., before working on his financial plan and investing. Here, you must note that your roles must be refitted as per individual clients. There may be some who may need their advisor's roles to be limited or different. For instance there is an HNI client who needs you to do his financial planning and help him invest, but he has another person who looks into his taxation aspects, so here you need to restrict your role to advisory only, and not poke into his tax planning.
To conclude, a unique characteristic of every business is environment is constantly evolving, and with this evolution the needs and expectations of the investors. Therefore, reviewing our roles is an ongoing process, because the existing roles need to change and upgrade as per the market need. There is a need to get out of the comfort zone, the need to think and provide services out of the box, the need to exceed expectations. You have to evolve from being a conventional investment advisor to a trusted financial life partner.
