What Makes A Good Financial Advisor? 7 Key Characteristics

The term “financial advisor” can include many financial designations, such as a Certified Public Account (CPA), Certified Financial Planner (CFP), and Registered Investment Advisor (RIA). 

A financial advisor’s job is to help clients with all forms of financial planning — from managing your client’s personal finances to investment management to selecting the best insurance policy. But what makes a good financial advisor? Naturally, there are some key characteristics that make for a good advisor.

In this blog post, we’ll dive into some of the top characteristics of a successful financial advisor and how you can develop these skills to wow your clients. 

The Characteristics of a Good Financial Advisor

As you prepare to become an excellent financial advisor, consider the following characteristics and determine how you want to showcase these essential traits to impress your clients. 

Ultimate Professionalism

Being a professional comes with the territory, especially when you’re interacting with clients directly. Professionalism doesn’t mean that you have to be stiff and proper or wear tailored suits to all your client meetings. Rather, it means that you have to act in a professional manner when engaging with your clients, prospects, colleagues, and other stakeholders by treating them with dignity, courteousness, and respect.

Likewise, your actions as a financial advisor must comply with the laws and regulations governing professional financial services. Professionals must be aware of these and must not engage in or assist another, even your clients, to violate these standards, either knowingly or carelessly. A financial advisor's acts must be legal.

Knowledgeable  

Most successful financial advisors you know probably focus on one facet of the industry. Honing just one type of service means that you accumulate more knowledge and experience quicker.

However, having a specialization is different from being completely useless with other topics.

Your clients still want a holistic experience. Most people go to a financial advisor to make understanding their financial life easier. Having to go to three different financial advisors makes things unnecessarily complicated.

While you can be particularly good in one area, you’ll still want an understanding of a variety of services to provide the best experience for your clients.

For example, even if you’re specializing in retirement planning, being able to help clients with estate planning or wealth management, even if just to answer several questions here and there, makes you more dependable from your client’s point of view.

Analytical

Having good analytical skills as a financial advisor is a must, especially when your line of work revolves around financial planning and advice.

Before you can provide proper personalized advice and strategy for your clients, you need to correctly assess where a client stands financially. After that, you need to be capable of handling analysis across multiple key areas like estate planning, cash flow planning, tax planning, and more. All of these require high-level analytical capabilities.

A financial adviser wears many hats, such as investment advisor or manager. When you conduct investment management for your clients, analytical skills are of chief importance. On top of giving them sound investment advice, you need to be able to assess various factors such as risk and return of their investment portfolio to asset allocation and more.

For example, a client with a huge risk tolerance likely prefers high-risk investment strategies. As their financial advisor, it's your job to guide them on where to invest and what to avoid, so they have other investments to fall back on if things go south.

You can't just agree or disagree with them because your gut feeling tells you something is going to be immensely successful or fail horribly. You need data, proper research, and reasoning to back it up. By properly assessing the risks involved with the investment and the returns it can yield, you can guide your client better, help them minimize unnecessary risks, and optimize their returns.

Transparency

You’ll find that being honest and transparent is something a lot of people pride themselves on.

However, in reality, transparency is one of the hardest traits to convey as an exemplary financial advisor.

Situations, such as informing your clients about possible conflicts of interest that may arise, affect the professional relationship and play a huge part in earning and maintaining their trust. 

You might be a fiduciary, but as an advisor, you shouldn’t force your opinions on clients. Rather, provide them with the best strategy to help them better their financial picture. Your clients want unbiased financial advice and accurate information to determine what’s best for them. 

It’s also important to be transparent when discussing how you’re being compensated — whether it’s through commissions, from a percentage of their investment value (like investment management fees), or through other means. 

In a good client-advisor relationship, there should be full disclosure of your financial incentives, so your client is able to make informed financial decisions.

Knowledge

The financial industry covers a lot of ground in a dynamic manner. Because of this, you should  continuously update your knowledge of recent changes in the industry. Even when you have years of experience, you can’t know everything in the field you specialize in.

Acknowledging this and continuing to look for opportunities to educate yourself allows your personal and professional profile to grow. The most conventional way to do this is by enrolling in classes and learning from reputable mentors in a formal setting. Other things — like learning new concepts, re-evaluating the concepts you’re familiar with, and challenging your beliefs by listening to new people — also count.

Continuously updating your knowledge makes your skill set more marketable and, more importantly, makes you a better financial advisor for your clients.

Passion

Passion is something so hard to define but so easy to recognize. Having a passion for the things you do can make or break your whole career. In fact, two-thirds of people are disengaged with their jobs. When you’re passionate about what you do, you’ll gravitate towards the subjects and won’t mind all the obstacles coming your way.

There’s always something new in the financial industry — be it new laws, regulations, tools, or investment products — and it’s not hard to see why some people can be overwhelmed by all that. There’s always something new to learn, something else to keep up with, and, if you lack the passion, it’s easy to fall behind.

There’s also another side of financial advisory to be passionate about: your work has an impact on people’s lives. Passionate advisors with a strong sense to do right by their clients will do their best to continue improving their skills so they can ultimately increase the quality of service received by their clients.

Trustworthiness

It’s important for your clients to trust you as their financial advisor.

Besides knowing your client’s financial goals and concerns, you also need to understand their overall financial and personal situation so you can provide them with a plan that caters to their specific needs. It would be difficult to draw up a personalized financial plan and guide your clients when you can’t connect with them because they are reluctant to share their dreams and fears with you, let alone allow you to help shape their financial future.

Therefore, it’s necessary to establish trust from the beginning to make the endeavor smoother. Start the relationship by getting to know your clients and reassuring them that you’re dependable and trustworthy.

Engage them in a thorough discussion about their overall background, goals, and concerns. Make sure they’re confident in you and that you understand their overall personal and financial situation well before moving on to discuss financial products and investment vehicles.

Your client may contact you because you come highly recommended. However, that’s just half of trust-building. What remains is to make sure they’re confident in your abilities and for you to maintain that trust by proving your competence.

Become a Successful Financial Advisor with Asset-Map

Now that you know the characteristics of a strong financial advisor, it’s time to reflect and make sure you have taken the steps towards achieving this goal.

Good advisors should have or invest time in developing all of the traits we’ve covered to thrive.

If you’ve got them down, it’s time to cement your success by making sure you’re maintaining a high and favorable reputation in the industry. Good reviews and high praise from clients, be it former or current, is one metric to measure yourself.

You can also use various tools that will help make your job easier and help you stand out from your peers. Maintain your track record and continue pulling in new clients by providing a better experience than other financial advisors.

Asset-Map helps you simplify your workflow and consultation conversations so you can create smoother experiences for prospects and clients alike. Our financial planning technology takes the guesswork out of creating outstanding financial plans for your clients. 

Schedule a demo with us today and see how you can make your client conversations more productive!