According to a new study released by the CFA Institute/Edelman Investor Trust Study, clients consider trustworthiness more important than investment management skills when choosing a financial advisor.
Research shows that when people are under pressure they will tend to revert to their more natural instinctive state.
Each client wants to be related to and served differently because their financial personality is different. This should be one of the primary drivers of who they seek out as their advisor.
Most clients have a blind spot when it comes to financial management; but equally most advisors have a blind spot about who their clients are.
The key to effectively managing your personal finances is to have a positive attitude. This requires having clarity of your financial goals, in particular the level of risk that you can take, and having the right advice from a professional advisor.
Do you have a system in place to holistically determine the complete financial personality style of the client? Or, are you still relying primarily on your intuition?
Behavioral finance has been given a significantly increased level of importance at a practical level with the UK regulator taking a greater behavioral finance direction in its overseeing of financial services.
Compelling research and behavioral finance insights illustrate how discovering your clients’ financial personality will help them to manage the risks that have a significant impact on their financial planning.
As a financial advisor, you have done a good job of helping your pre-retired clients dream, define their ideal goals and manage a portfolio to achieve those goals. But that may or may not have anything to do with their reality.