A Closer Look at Financial Advisors' Challenges

Managing client expectations, low interest rates, and emotional involvement are some of the most significant challenges that financial advisors confront. 

FREMONT, CA: Financial advisors face various issues on a daily basis. To be successful in this industry, they must wear multiple hats, including asset managers, financial planners, psychologists, and marketers. While most advisers can handle all of these duties successfully, they usually need help with one or two.

Managing customer expectations: While managing a client's portfolio may be a simple task, managing their expectations can be far more difficult. Many clients have unreasonable expectations regarding investment returns and interest rates. Advisors must be able to demonstrate to clients how they contribute value to the investment equation. One way they can accomplish this is by assisting clients in maintaining a long-term perspective in their investing so that they do not become disoriented by market fluctuations. It takes effort to do this regularly, but customers who can see how their adviser is keeping them on track are far more likely to stay with their advisor.

Maintaining communication: Advisors have more tools than ever before to maintain regular contact with their customers, yet many neglect to do so when things are going smoothly. A steady flow of contact is required to maintain a strong relationship with the majority of clients, regardless of market conditions. Advisors may choose to utilize social media platforms like LinkedIn or instant messaging apps like WhatsApp to stay in touch with tech-savvy clients.

Low interest rates: It is challenging for fixed-income investors and individuals who wish to live off their investment income because interest rates are still very close to historic lows. Many advisors have had to add riskier assets into their customers' portfolios than they would have otherwise, and the values of many of these instruments are expected to fall once interest rates increase again. Advisors can mitigate the impact by emphasizing total return over yield when investing.

Information management: Some advisors become overwhelmed by the vast amount of information available online and elsewhere. Smart advisers concentrate on client behavior rather than reacting to the latest news. Advisors must also be able to direct their customers to credible sources of data that have proven to be accurate over time. This can help to avoid misunderstandings and keep clients from making mistakes based on misinformation.