Ideas to Uplevel Your Advisory Practice in 2023

Dec 22, 2022 | Blog Posts

From turbulence in the global economy to heightened scrutiny of cryptocurrency, widespread layoffs, geopolitical tensions, proliferating commercialization of AI, and a changing climate, it’s indisputable that humanity is navigating a pivotal moment in history. 

Adaptation to a changing world is key. This ethos is especially important for financial advisors whose livelihoods depend on maintaining a book of business — and making well-reasoned decisions about their clients’ wealth.

What steps can financial advisors take to uplevel their practices in 2023? The short answer:  mindset. Financial advising is a profession that relies on discretion, creativity, critical thinking, and communication. Given that the landscape of investment products is more broad than ever before, it’s up to financial advisors to help their clients distinguish signal from noise.

Here are some suggestions for financial advisors to strengthen their practices in the months (and years) ahead. 

1. Double-down on the power of the profession

One of the greatest sources of global power is the wealth of everyday Americans. According to one 2021 estimate, there are approximately $54T assets under management (AUM), which represents about half of all AUM in the world.

Keeping this bigger-picture context in mind, financial advisors are liaisons between investors, their wealth, and the throughline to societal prosperity. After all, investing is all about putting money to work. Every dollar makes an impact in humanity’s capital markets. 

What are Americans funding with their hard-earned financial resources? To what extent do investments reflect the values of investors? Empowered financial advisors will learn to be self-aware of these bigger-picture questions, given the power of money in our world. With this self-awareness, advisors can better tailor investment strategies to clients’ needs.

Consider the experiences of  Martin A. Smith, founder at Wealthcare Financial Group, as an example. 

“In October 2021, I rebalanced all of our clients’ portfolios to a ‘defensive’ allocation, based on my outlook for the economy in 2022. As a result, we have been able to outperform the Dow and S&P 500 by a significant margin,” Smith explains.

 “I did the same at the start of the pandemic. We went defensive on February 25, 2020 when the Dow was approximately 27,000 points. Our model portfolio consisted of corporate bonds, consumer staples, utilities, treasury inflation protected securities and commodities. As the market fell from 29,000 points to 19,000 our model portfolio increased in value. Subsequently, our assets under management increased as word began to spread by some of our clients to their friends and families. By going defensive early, when the market recovered, the value of our model portfolio grew even more.”

Self-aware financial advisors will be well-positioned to empower their clients with winning investment strategies in the years to come. 

2. Get clear on your clients’ values

Younger investors are astute to the power of their money. 

Consider how 75% of millennials say their personal values guide their investment decisions, according to the 2022 Schwab Modern Wealth Survey.  Meanwhile, 73% said they invest in companies that align with their personal values, higher than both Generation X (69%) and baby boomers (63%).

These trends are taking place against the backdrop of a historic generational wealth transfer, in which millennials and Gen Z are becoming the beneficiaries of their parents’ estates. Younger investors aren’t just idealists. They have influence and power — and financial advisors will benefit by listening to their needs, aspirations, ideals, and concerns. 

Know what your clients value to have better conversations with them.

3. Get comfortable as a problem-solver

One of the biggest mistakes that a financial advisor can make is to underestimate how much their clients are self-directing their learning through online resources. It’s important to expect your clients to be reading what they want to read and forming their own opinions. 

Emphasizing your value as a financial advisor means offering insights beyond what’s accessible through search engines and other channels — especially when the question of ‘why’ comes up.

Why choose one model portfolio over another? Why do ESG investments struggle to perform in comparison to other asset classes? 

Answers may not always be readily available, understandably. In these moments, top advisors will be able to say, “I’m not sure, but I’ll find the answer.” Your perspective is the throughline to factual, balanced, and tailored expertise. It’s up to you to make that connection for your clients.

4. Build impeccable emotional intelligence

For better or worse, people have become accustomed to personalized digital experiences at every touchpoint in their lives. The challenge? People aren’t always aware of the algorithms behind the scenes. This status quo puts a lot of pressure on financial advisors who are humans, not machines, to meet superhuman expectations around speed.

One solution is to track and be responsive to potential emotional states. Are you noticing your clients logging into their online portals frequently during market fluctuation moments? Are your clients navigating tough conversations with their parents or grandparents? Did someone recently experience a financial loss? 

“I feel like we’re counselors or psychologists most days,“ explains Kevin Andrews, founder at Eagle Financial Group. “The market challenges that we’re seeing these days are unique. We’ve been under pressure to put on our economist hats and respond accordingly. It’s more than planning.”

Navigating these moments means knowing when to pick up the phone, understanding what helpful content to share, and recognizing when an investor may be likely to be having a bad day.

Emotionally intelligent advisors will know how to anticipate potential issues ahead of time. 

5. Embrace education as a strategic advantage

Historically, the financial advisory profession was about access to the best stocks, relationships with brokers, and skilled implementation of model portfolios. Today, these value propositions are checkboxes rather than true differentiators. Technology has democratized the wealth management industry to the extent that financial advisors are no longer the gatekeepers to access products and services. 

So how can advisors establish a unique and compelling value proposition for their practices?

The short answer: create educational content that investors can easily access and browse. Resources like blog posts, podcasts, and guides can help build credibility around specific topics and viewpoints.

Consider the example of Mark Silverman of Silverman + Associates, LLC. He produces a podcast called Saving with Silverman, which highlights his personality, advising philosophy, and approach to working with clients.

Potential clients, and people generally, can get to know him even before reaching out to potentially worth together. Silberman’s personality is, ultimately, what makes his firm uniquely his. 

Every advisor’s worldview is unique. The industry becomes more robust when you put your knowledge out into the world.

6. Master the art of distinguishing signal from noise

One outcome of the digital revolution is that anyone and everyone has a megaphone to publish and share ideas. For this reason, investors may be receiving mixed messages from experts who have different perspectives.

Consider the fluctuating media narratives about ESG investing as an example. Within a window of 3 days in December 2022, Fortune Magazine ran the following two headlines:

Meanwhile, ESG assets are expected to grow from $35 trillion at the beginning of 2021 to about $50 trillion by 2025, according to Bloomberg Intelligence.

So what’s the real story? 

Well, it’s a matter of perspective. It’s up to you to communicate the right one to each individual client.

7. Turn your technology stack into a second brain

As a financial advisor, you only have one brain. But remember, your mind is both one of a kind and extremely valuable. 

These days, a trending topic among engineers is a second brain. The idea is to adapt to the fast pace that information moves rather than fighting it or getting left behind.

Rather than trying to cram more information in your head, you can outpace the speed of algorithms.

“A second brain helps you get a handle on the volume and complexity of information you’re exposed to at virtually all times, with the eventual goal of translating that knowledge into something useful,” writes Eira May for the Stack Overflow Blog.

In the financial advisory profession, a second brain consists of a network of software integrations that support the flow of information between advisors and clients. The key is to use tools that simplify communications and decision-making.

With this infrastructure in place, you’ll have more time for 1-6 on this list.

The bottom line

As a financial advisor, your expertise is more valuable than ever. The challenge will be owning this narrative and making sure that others can see it. With so much noise in the finance and ecosystem, 2023 is a great year to establish a distinct voice in the industry — and build a thriving practice on your terms.

CircleBlack is here to help

CircleBlack is an all in one management platform for financial advisors. You can think of it as an operational dashboard to better connect financial advisors and their clients around a shared perspective. The outcome is better collaboration and communication for relationship-focused advisors.

To learn how our software can help you build, manage, and grow your wealth management practice, get in touch.

This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal, or tax advice.

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