Advisors can harm clients by trying to ‘do it all’ themselves


A financial advisor I know told me how he handles the growing complexity of our industry on a recent weekend at my hunting lodge: He spends one day a week on compliance and one day a week on research.

I was incredulous. In today’s world, there is no way you can keep up with either compliance or research in one day a week. Compliance is a full-time job. Research is a full-time job. Trying to compress them into one day a week is like trying to do the job of an NFL coach just one day a week. Nonetheless, I see many advisors in small- and midsize firms operating the same way that he does.

Financial advisors often think they are providing the best possible service to their clients by managing their time the way this advisor does, but they are lying to themselves and their clients. Part of delivering value beyond a doubt in our industry means recognizing when you can’t do certain things on your own.

Many advisors should be asking themselves some of these tough questions: Would you hire your own firm to perform all of the tasks you are now doing for your clients? Are you updating your technology quickly and effectively enough to keep up with the leading firms in our industry and offer customers the 24/7 transparency they want? And are you currently growing your firm’s revenue and profits at 15 percent a year so you can reinvest in the business?

Many independent advisors could not possibly answer yes to these questions.

So how can advisors in small practices deliver the value that customers demand today?

One way is to start outsourcing tasks at which they cannot excel. There are plenty of experts in our industry in areas such as research whom they can hire. Rather than try to be the library, advisors should think like librarians.

“The financial services industry is being disrupted. Financial advisory firms that can’t say they are the Uber of this industry are eventually going to go out of business.”

Another option is to join an alliance where they can team up with other advisors to gain some of the advantages that come with scale. By doing so, members in a financial advisory alliance can get access to new financial tools that may be too costly for them to develop on their own.

For some small firms, another option is to narrow their niche to deliver the leading expertise in a very narrow area. For instance, an advisory firm might specialize in succession planning for business owners.

To deliver value beyond a doubt, advisors also need to show they are willing to stand up and be measured. Today’s customers want to know with certainty that their advisor is moving the needle toward their goals. Nonetheless, many advisors are not proving this.

Every advisor needs to get access to clear reporting tools that are at least as good as those offered by the leading firms in their industry to tell customers about the value they are creating. And once they are technologically capable of being fully transparent, they must be willing to raise the bar on their team’s performance — because there will be nowhere to hide.

Some financial advisory firms may also need to rethink their approach to profits to deliver more value to customers. Many owners are generating too big a profit, because they are not investing in their teams.

Financial advisory firms will only deliver the best service if they hire and retain people who see their work as a calling and then compensate those people well, ideally through a profit-sharing plan that gives them a real stake in the firm’s success. That approach will always trump the most ruthless bottom-line focus in the long run.

The financial services industry is being disrupted. Financial advisory firms that can’t say they are the Uber of this industry are eventually going to go out of business, unless they find a way to deliver value beyond a doubt now.

— By Ron Carson, founder and CEO of Carson Wealth Management Group. He is co-author, with Scott Ford, of “The Sustainable Edge.”


Get in Touch

In 15 minutes we can get to know your situation, then connect you with an advisor committed to helping you pursue true wealth.

Contact Us