Wearing Many Hats

What is the role of a financial advisor? It differs in each client relationship.

The role of a financial advisor can vary greatly depending on each client’s needs. I often joke to my office neighbors, many of whom are therapists, that I am an “untrained therapist.” While the joke is entirely unfair to their post-graduate education and profession, I have been surprised by how much of my work requires similar skills to those of a therapist.

Here are some of the many hats I wear in my day-to-day work as a financial advisor.

The Mirror

Sometimes I am a mirror, helping to reflect the client’s words back in a more digestible format. People want to be heard and to be understood. The most essential skill for a financial advisor is learning to remain quiet and to listen. In recent years, I have adopted a practice of allowing time for silence after a client stops speaking. The silence invites them to share more. What is shared after a few seconds of silence, often, is the most important thing, but you have to wait for it.

In the role of a mirror, I will summarize what I have heard a client say in my own words, and then ask for clarification. This allows the client to correct anything I may have misunderstood and to add more to the topic.

The Sponge

There are also times when clients need me to be a sponge and absorb what they need to unload. This role is the most similar to that of a therapist. Money is a vital topic, second only in importance to health. But our brains are not wired to watch the value of a portfolio change wildly with market movements. Add in the 24-hour doom news cycle, and it's easy to accumulate a ton of mind garbage that needs unloading.

Emotions are inextricably linked to money and investing. But making investment decisions based on emotions is almost always a mistake. Being a sponge to help release those emotions is a key role of a financial advisor.

The Intellectual Sparing Partner

Investing is a heady endeavor. It requires learning a mix of economic and statistical model, academic theorems, and equations. All of this math is mixed with a relentless attempt to predict an uncertain future. News stories and headlines provide a constant drum of ‘evidence’ either supporting or negating one’s predictions.

Clients often need someone to debate the pros and cons and to provide a framework for making decisions. I am a fan of using the worst-case scenario possibility and working backward from it. It is so easy to get lost in the potential upsides that we develop blind spots to risk. Acting as a neutral, intellectual sparing partner is a fun and stimulating role to play.

The Punching Bag

One of the top reasons to hire a financial advisor is to take the pressure off of making investment decisions. The advisor becomes the person to blame when markets take their next, inevitable downturn. This is when I assume the role of a punching bag to absorb a few blows. Similar to the sponge, this role allows a client to offload emotions stemming from fear. And nothing is more important than removing emotions from the investment decision-making process.

The punching bag is the least enjoyable of roles, but a necessary one at times. Even when markets are soaring, mistakes can still occur. A deadline is missed, paperwork contains errors, and money transfers are delayed. These operational headaches, although rare, are unavoidable for high-volume advice givers. My best advice to young financial advisors is to get accustomed to owning up to your mistakes and apologizing. Just make sure you learn from each one. My past mistakes have helped me avoid countless slip-ups over the years.

The Confidant

People tell their financial advisors things they wouldn’t even say to their friends or family members. I’m always honored when a client shares pregnancy news with me before they’ve even told the future grandparents. Being the “first to know” big and important news in a client’s life is an honor. Quitting a job, selling the company, starting a new company, proposing marriage, and preparing for divorce. These are all conversations I’ve had over the years with clients mulling over some of life’s most important decisions.

It goes without saying that discretion is a key skill required of a financial advisor. To become a confidant, you must build a relationship founded on strong and mutual trust.

The Cheerleader

Nothing is more exciting in this role than watching clients bring their financial plans to life. From toasting retirements to oggling photos of grandchildren, being a client’s cheerleader has been one of the best memories of my career. I adore receiving updates on bucket list vacations, gorgeous home renovations, and personal achievements. It’s hilarious that I had zero interest in being an actual cheerleader in high school.

Cheering on clients who achieve their goals is pure joy. It’s often a culmination of years of hard work and planning. Although I play a role as the advisor, it’s really the clients who deserve the credit for their accomplishments.

These are a few of the many hats I wear as a financial advisor. What have I missed? Are there other roles your advisor plays in your life? I’d love to hear about them.