Top Financial Advisor Fails: Living Life in Your Comfort Zone

Top Financial Advisor Fails: Living Life in Your Comfort ZoneEd Note: This article is part of an ongoing series focused on the mistakes made by financial advisors.

In April 2014, a report by Fidelity Investments suggested complacency rules in the financial advisory industry. In an online survey of 813 advisors across channels, the study found that many advisors overlook important steps to ensure long-term growth. Two-thirds of participants said they think a little personal attention is enough to stand out in the crowd instead of, say, building a niche practice or addressing a particular aspect of wealth planning. Another two-thirds of survey respondents admitted to not having multi-year business plans in place and 43 percent don’t think they need to do anything different to serve next-generation clients.’s  definition of complacency is “a feeling of quiet pleasure or security, often while unaware of some potential danger, defect, or the like; self-satisfaction or smug satisfaction with an existing situation, condition, etc.”

Perhaps a little complacency is understandable – advisors are now seeing the highest client-asset and compensation levels since 2007. But Brian Nelson, head of practice management at Fidelity’s National Financial clearing unit, believes advisors shouldn’t let success go to their heads. “It’s important to not put off what’s important in ensuring that the future remains just as attractive,” said Nelson.

Business has been good for advisors. According to the Fidelity study, 95 percent of advisors grew their business last year, with average assets under management resting at $62 million and average compensation at $240,000. However, changing market dynamics call for advisors to consider taking a closer look at building client portfolios for the future.

For help with this, advisors should look to “high-performing” peers for examples – those who advise on more of their clients’ total investable assets than others have faster-growing books and report higher career satisfaction.

The Fidelity study found that high-performing advisors use three strategies to help position them for future success.

Developing a solid business plan. Advisors appear to be behind when it comes to planning. Sixty-six percent of advisors surveyed said they did not have a multi-year plan in place and more than one-third did not have a business plan. It’s time to put long-term plans on paper with clearly defined initiatives for bringing them to fruition. They should factor in their own career goals, business continuity and succession planning.

Build a client portfolio for tomorrow. Despite warnings that the population is aging, 43 percent of advisors surveyed said they did not feel it was important to evolve their practice to meet the needs of a younger population. High-performing advisors, on the other hand, are taking steps to realign their client base. Forty-two percent of advisors said they target the Gen X and Gen Y investors. High-performing advisors were also twice as likely to ask less profitable clients to leave the firm and twice as likely to target high net worth investors.

Differentiate. Advisors should resist the instinct to follow the herd. High-performing advisors do this by creating teams to enhance client service levels, embracing technology to better engage with clients and customizing their offerings.

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