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1. Accepting client spending at face value.
Carolyn Nolan, Private Wealth Advisor, The Nolan Group, Winchester, Massachusetts:
A key input we obtain from clients is the spending amount they're looking to recreate (in retirement, for example). The mistake I have made in the past is to accept at face-value whatever spending amounts clients provide. I've found the exercise of going through a cash-flow analysis with a client — breaking down their "rocks" of expenses (not the Saks vs. CVS but the "normal credit card" bill vs. average cash expenses after accounting for what they've saved or put against various other firm monthly payments) is one of the most impactful exercises. It allows the advisor to confirm if the client input is correct; and instills confidence in the client that the rest of the financial plan analysis actually reflects what they are projected to do (vs. taking a "rule of thumb" and hoping they're that average number!).
2. Forgetting you're a business owner, too.
Jeffrey Edwards, President, Atlas Financial Planning, Irvine, California:
The greatest mistake or disservice I've made in my career was focusing too much on being a "financial planner" and not a business owner. Whether you're a financial planner, advisor, insurance broker or "specialist," at the end of the day you are a business owner. The buck stops with you and if you don't learn accountability and scalability, it could be the end of your career.
3. Being too loyal to an employer.
Sarah L. Carlson, Founder and Private Wealth Advisor, Fulcrum Financial Group, Spokane, Washington:
My biggest mistake [was] early in my career. I was a career agent for an insurance company, [and] stayed in that system too long. One of my biggest victories was getting out of that system and going to the independent channel. Too many advisors are too loyal to their employer at the expense of their clients and themselves.
4. Proceeding without all paperwork in place.
Sallie Mullins Thompson, CPA Financial Planner and Tax Strategist, New York:
[The worst] mistake I ever made was not having a prospect sign the engagement letter in advance of starting to work with her. I explained everything verbally on how she wanted the info. She would not read anything I sent her. As she was referred to me by someone whom I greatly respected, I began the work. About a quarter way through the project, when I presented her with the agreement to sign and the invoice for the time I had spent to date, she balked and ended the relationship a month later. She did not pay the invoice, either. I certainly learned my lesson — never proceed without all paperwork in place.Advertisement
5. Forgetting to engage both parties in a couple's planning process.
John Cooper, Private Client Advisor, Greenwood Capital, Greenwood, South Carolina:
My biggest mistake has been around practice management. Early in my career, when assisting couples with financial decisions, I dealt only with the decision maker (mistakenly identified as "the one who talked the most!"). After a wealthy "decision maker" passed and I lost a large account, I realized the importance of engaging both parties in the financial planning process, even if that meant politely quieting the more verbal partner to draw the other into our conversations.
6. Not being discreet, even with couples.
Jeff Fishman, Founder and Managing Member, JSF Financial, Los Angeles, California:
When reviewing a couple's finances, you may discover something of which one spouse was unaware. Use caution when inquiring about their budgetary details. In cases of financial infidelity, one partner may spend money on certain extravagances that do not necessarily benefit the family. There's no telling how a client may react to the detailed financial information, and you probably don't want this scene unfolding in your office.
7. Handing off financial plans to someone else.
Beth Blecker, CEO, Eastern Planning Inc., Nanuet, New York:
Two mistakes I made were: I listened when people said women do not make good financial advisors. Women make great financial advisors, and I love what I do. Second: A former accountant, I started in this business by charging for financial plans that were then to be implemented by someone else. Consequently, the plans usually were not implemented or were substantially changed, often to what I felt was not in the client's best interest. From this frustration I became a comprehensive, "holistic" planner because good planning is about more than numbers, it's about life.
8. Servicing clients who are not a good fit and are toxic to your business.
Larry P. Ginsburg, Founder, Ginsburg Financial Advisors, Oakland, California:
I tried to accommodate unreasonable client requests, which I learned weren't beneficial to those clients, my other clients nor me. It was painful to learn that saying "no" to requests that were outside what we know is appropriate to effectively help clients was better than trying to "teach" them to benefit from what I determined was in their best interest. Once I made this decision, it was easier to avoid such potential conflicts in the future.
9. Not corralling clients who want to beat the market rather than have financial goals.
Scott A. Bishop, Executive VP, Financial Planning, STA Wealth Management, Houston, Texas:
Clients are inundated with advertisements and media about the financial markets that can color their view of their portfolios, leading them to think they will succeed only if they outperform the S&P 500 or another outside benchmark. But as financial professionals know, it's almost impossible to beat the market. And when people try to do so, they can end up taking too much risk, micromanaging assets and failing to let long-term strategies run their course. The focus should be achieving their financial planning goals (aggressive saver and conservative investor) vs. beating the S&P 500.Advertisement
1. Accepting client spending at face value.
Carolyn Nolan, Private Wealth Advisor, The Nolan Group, Winchester, Massachusetts:
A key input we obtain from clients is the spending amount they're looking to recreate (in retirement, for example). The mistake I have made in the past is to accept at face-value whatever spending amounts clients provide. I've found the exercise of going through a cash-flow analysis with a client — breaking down their "rocks" of expenses (not the Saks vs. CVS but the "normal credit card" bill vs. average cash expenses after accounting for what they've saved or put against various other firm monthly payments) is one of the most impactful exercises. It allows the advisor to confirm if the client input is correct; and instills confidence in the client that the rest of the financial plan analysis actually reflects what they are projected to do (vs. taking a "rule of thumb" and hoping they're that average number!).
2. Forgetting you're a business owner, too.
Jeffrey Edwards, President, Atlas Financial Planning, Irvine, California:
The greatest mistake or disservice I've made in my career was focusing too much on being a "financial planner" and not a business owner. Whether you're a financial planner, advisor, insurance broker or "specialist," at the end of the day you are a business owner. The buck stops with you and if you don't learn accountability and scalability, it could be the end of your career.3. Being too loyal to an employer.
Sarah L. Carlson, Founder and Private Wealth Advisor, Fulcrum Financial Group, Spokane, Washington:
My biggest mistake [was] early in my career. I was a career agent for an insurance company, [and] stayed in that system too long. One of my biggest victories was getting out of that system and going to the independent channel. Too many advisors are too loyal to their employer at the expense of their clients and themselves.4. Proceeding without all paperwork in place.
Sallie Mullins Thompson, CPA Financial Planner and Tax Strategist, New York:
[The worst] mistake I ever made was not having a prospect sign the engagement letter in advance of starting to work with her. I explained everything verbally on how she wanted the info. She would not read anything I sent her. As she was referred to me by someone whom I greatly respected, I began the work. About a quarter way through the project, when I presented her with the agreement to sign and the invoice for the time I had spent to date, she balked and ended the relationship a month later. She did not pay the invoice, either. I certainly learned my lesson — never proceed without all paperwork in place.Advertisement
5. Forgetting to engage both parties in a couple's planning process.
John Cooper, Private Client Advisor, Greenwood Capital, Greenwood, South Carolina:
My biggest mistake has been around practice management. Early in my career, when assisting couples with financial decisions, I dealt only with the decision maker (mistakenly identified as "the one who talked the most!"). After a wealthy "decision maker" passed and I lost a large account, I realized the importance of engaging both parties in the financial planning process, even if that meant politely quieting the more verbal partner to draw the other into our conversations.6. Not being discreet, even with couples.
Jeff Fishman, Founder and Managing Member, JSF Financial, Los Angeles, California:
When reviewing a couple's finances, you may discover something of which one spouse was unaware. Use caution when inquiring about their budgetary details. In cases of financial infidelity, one partner may spend money on certain extravagances that do not necessarily benefit the family. There's no telling how a client may react to the detailed financial information, and you probably don't want this scene unfolding in your office.7. Handing off financial plans to someone else.
Beth Blecker, CEO, Eastern Planning Inc., Nanuet, New York:
Two mistakes I made were: I listened when people said women do not make good financial advisors. Women make great financial advisors, and I love what I do. Second: A former accountant, I started in this business by charging for financial plans that were then to be implemented by someone else. Consequently, the plans usually were not implemented or were substantially changed, often to what I felt was not in the client's best interest. From this frustration I became a comprehensive, "holistic" planner because good planning is about more than numbers, it's about life.8. Servicing clients who are not a good fit and are toxic to your business.
Larry P. Ginsburg, Founder, Ginsburg Financial Advisors, Oakland, California:
I tried to accommodate unreasonable client requests, which I learned weren't beneficial to those clients, my other clients nor me. It was painful to learn that saying "no" to requests that were outside what we know is appropriate to effectively help clients was better than trying to "teach" them to benefit from what I determined was in their best interest. Once I made this decision, it was easier to avoid such potential conflicts in the future.9. Not corralling clients who want to beat the market rather than have financial goals.
Scott A. Bishop, Executive VP, Financial Planning, STA Wealth Management, Houston, Texas:
Clients are inundated with advertisements and media about the financial markets that can color their view of their portfolios, leading them to think they will succeed only if they outperform the S&P 500 or another outside benchmark. But as financial professionals know, it's almost impossible to beat the market. And when people try to do so, they can end up taking too much risk, micromanaging assets and failing to let long-term strategies run their course. The focus should be achieving their financial planning goals (aggressive saver and conservative investor) vs. beating the S&P 500.Advertisement
It's hard for humans to admit to mistakes, but everyone makes them, especially when it comes to work. These can be rookie mistakes, business-building missteps or client headaches. We asked advisors across the country what mistakes they had made as an advisor, whether related to investing, practice management or anything financial. Many were willing to share their stories, and how they changed their behavior going forward. These are mistakes that most advisors have made, most likely, but the key was how they corrected the problem and moved on. Visit the slideshow gallery above to see what mistakes tripped up nine financial professionals and how they learned a lesson and changed their behavior (and business acumen). READ MORE:
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Ginger Szala
Ginger Szala is executive managing editor of Investment Advisor magazine. She covered the financial business and alternatives industry for 30 years while editor of Futures Magazine Group. MSJ Northwestern, BA University of Wisconsin-Madison. She is based in Chicago. Go Blackhawks!
