Remember the classic tale of two traders who sold their Emperor some new clothes, suggesting the garments were invisible to the naïve or uneducated? No one in the kingdom questioned the Emperor for fear of appearing ignorant, until a child points out the Emperor has no clothes.
How is this story relevant to financial advisors today?
Since we started in the business, the perceived wisdom is that financial advisors possess unique knowledge, information, and experience that qualifies them to manage your financial affairs. Clients rarely question this…but what if a child of one of your clients, points out that all of the advice you offered was available in a few Google searches, that there’s nothing special about your advice…that the Emperor, their advisor, has no clothes?
Why is this so important right now?
Because we are entering a period in the market where several external events are converging: the pandemic, election, social unrest, and volatile markets. These all impact consumer sentiment. When clients are worried, everything is called into question; we cannot afford to presume we’re not being questioned right now.
There are three things you can do right now to build trust, demonstrate competency, and highlight the value of your advice:
1. Identify Gaps in your Practice
How well-versed are you in: the rules around Annual & Lifetime Gift Tax Exclusions? The potential elimination of a stepped-up basis at death, which could wipe out any wealth transfer plan with a massive tax bill? Your clients need to know you can help and you are here for them. Otherwise you run the risk that they’re already talking with their accountant, or perhaps another advisor for help.
2. Educate Yourself on Tax Planning
Ask your clients whether they are worried about income taxes. Are business owners worried about phasing out deductions? Are they worried about capital gains tax changes? Asking these questions will demonstrate your competency, solidify your relationship, and secure your place at the forefront of your client’s financial future.
3. Embrace Digital Solutions
Host client Zoom meetings with expert guests and Centers of Influence to address the anxiety clients may have. You can demonstrate your value through conversations over a digital medium, letting them know they are not alone and you can help. The best advisors will prepare for the next decade by listening to clients to understand the basis for their anxiety or fear, serving as a calming source, and creating viable action plans. Take these steps now to prepare for the next ten years and put yourself in the place of greatest potential with your clients and the generations to come.
This article was previous published in Wealth Management’s 2021 Market Outlook Issue and the original piece can be accessed here.
EVP, Head of Wealth Management