Since the inception of financial planning in the 1960s, it’s safe to say that the industry and the people it serves have thoroughly evolved.
With that, the challenges that financial advisors face day in and day out have also evolved.
Some for the better and some for the worse, depending on how you view it.
Consolidated Planning helps advisors navigate these perceived challenges by providing support and therefore, solutions, all of which prioritize what’s best for your clients.
While financial advisors play a critical role in helping individuals and businesses navigate the complex world of finance, this career is not without its challenges. In this article, we will discuss the biggest challenges facing financial advisors today, and how they can overcome them, all to decide if this is the right career for you.
What Challenges Will You Face As A Financial Advisor?
Facing challenges is unavoidable regardless of the career path you choose. However, if all you want to do is make money, there are easier ways to do so.
One of the more common sayings of the profession is that it’s the toughest job to make $25,000/year and the easiest to make $250,000/year.
Let that sink in.
That’s because as the industry further evolves, so do the complexities.
#1 FINDING THE RIGHT CLIENTS
First and foremost is something every financial advisor faces head on, regardless of their time in the industry. Finding clients. And finding the right clients.
This can be for a number of factors on the advisors end but also the consumer’s end:
- Competition for clients
- Not knowing your ideal client
- Lack of an online presence
- Lack of trust
- Lack of awareness on offerings and value
- Weary of the cost of doing business
The good news is, the right client for you is not necessarily the right client for your competitor, you just need to identify who the right clients are for you and your practice.
Further, you also need to do so in a sustainable way.
What do we mean by that?
Some advisors rely on personal observations to find clients, like running into people when their out. While this is an important way of meeting people, an advisor cannot solely rely on this to build their practice over time.
Sustainably finding clients means being intentional in your targets, marketing, and your referral business.
#2 MARKET FLUCTUATIONS
Whenever someone’s hard earned money is involved, there are chances for things to go sideways. In terms of market fluctuations, that can look like a rollercoaster at times – up, down, all around.
Where we stand today, as this is written, the markets are down. And when the market is down, a client’s portfolio is down. Generally speaking, clients don’t like this. (Surprising, right?)
Market fluctuations can function in one of two ways for an advisor:
- A head wind with unhappy clients
- A tail wind with clients looking for new advisors (hint, hint, maybe that’s you)
During a volatile market, it’s likely the majority of clients will approach you with their fears and anxieties about where their finances stand. Because this is your unique ability, not theirs, it will be necessary to provide reassurance that the situation is being actively monitored.
You better be ready to field those questions and worries.
To best ease your client’s worries, and ultimately ensure they remain your client, you will lean on a few skills that you better have around bedside manner. This includes:
- Understanding client expectations
- Providing high communication, high touch points
- Empathy towards the situation
- Proactively ensuring your clients feel secure
While the effects of market fluctuations are unavoidable, proactively engaging your clients especially during these times helps ensure that these periods aren’t sending your clients searching for a new advisor.
#3 INCREASING COMPLEXITY
The world of finance has been increasingly complex over the years. Along with this complexity comes the need for financial advisors to be more, do more, and know more. These complexities require financial advisors to possess a broad range of skills and knowledge, making it a challenging but rewarding career path.
So, what factors should financial advisors pay specific attention to when it comes to their skills and expertise?
It’s no surprise that the innovations in technology have dramatically increased over the years. And not just for this industry. From advancements like robo advisors, software, online trading platforms, and the surge in digital marketing, there is a lot of ‘keeping up with the Jones’ to do.
Technology is an enabler for business but it also makes things more complicated. Today, more than ever, you have more choices but also more to learn. Adequately leveraging technology, allows financial advisors to provide more efficient and effective services to their clients, while also staying competitive in a rapidly evolving industry.
What will set you apart from these technological advancements is your ability to be empathetic. What happens if you can’t provide a level of empathy? Well, then maybe technology can do your job for you.
BREADTH OF PRODUCTS AND SERVICES
The increasing complexity of the industry is also due to the breadth of products and services available today.
It used to be that investment folks only worked with investments, insurance folks only worked with insurance, and baking folks only worked in banking. Today, financial advisors are at least dipping their toes into all of these areas to a certain extent, if not jumping all the way in.
Because of this, there has been a breakdown of the traditional silos that once existed in this industry. Meaning a financial advisor can truly be a client’s one trusted advisor for a multitude of their financial wellness if they desire. And since client’s want more, the breadth of products available has grown to meet their needs.
Financial advisors are now in one big pond, working with countless products and services to be that one advisor for their clients.
Better yet, today’s clients want to be kept in the loop here and have a clear picture of what their financial outlook looks like. Not just be transacted upon. But be kept abreast on opportunities, gaps, and overall performance of their money and their accounts.
Because of the increasing complexities of the industry, regulations have followed suit. The more services a financial advisor offers, the more regulations that follow. The regulations for financial advisors come from four main sectors:
- State regulations for insurance and investments
- Federal regulations for insurance, investments, and banking
- SEC regulations for the securities and exchange commission
- FINRA regulations for rules and guidance for a safe and fair market
These regulations are put in place to protect consumers and ensure ethical practices are in place across the industry.
Because of this, financial advisors are expected to keep up with rules and regulations as often as they change or are added. And regulations are never lost but are always gaining. Staying up-to-date here is crucial as failure to comply with rules and regulations can result in serious consequences for you and your practice.
Overcoming These Challenges In Your Career
These challenges will continue to grow as you move along in your career. Just as they have over the last 10, 20, 30 years.
Overcoming these challenges requires the advisor to change their tune and not only adapt but to actively seek out help.
THE WHO NOT HOW
Being a financial advisor is hard, even on the best days. People and methods are what will help to diminish the challenges.
Diminish, not remove.
Finding the right clients requires more than just dumb luck. Especially if you want to do so sustainably. Implementing a marketing strategy will help get you there and might include:
- Understanding your ideal client
- Identifying your true target market(s)
- The right approach to asking for referrals
- Demonstrating recognizable expertise in your niche
Leveraging marketing and networking strategies can help you find the right clients for you and your expertise.
TRAINING & RESOURCES
With so much to learn in today’s financial landscape, access to continuing education is essential. This includes:
- Training on best practices
- Adhering to rules and regulations
- Learning and navigating products
- Understanding how to best solve your clients goals
- Professional development
Personal and professional development are necessary for any financial advisor who wants to be more to their clients.
Not only can the right support and resources from your firm help you get there, but the right mix of autonomy and support helps you to learn how to actively make time to grow as an advisor.
The Right Financial Firm Can Help Diminish These Challenges In Your Career
Regardless of experience level, these challenges facing financial advisors just comes with the territory of doing business.
However, what matters here is choosing the right financial firm for you. Part of your evaluation when it comes to these firms should include what support is available to help diminish these challenges.
The right support in your first year will make all the difference when you come face to face with these challenges.
To learn more about how you can face these challenges head on, chat with a recruiter.
2023-155333 Exp. 5/2025
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