The last 15 years have been nothing short of eventful for financial advisors. Those who have been in the game that entire time have seen significant global and economic shifts that reshaped the industry.
And with a new crop of financial advisors entering the industry, there are a few learnings that seasoned professionals would be smart to pass down. Below are some insights from present financial advisors that might have been useful to know when they started out:
1. Ethical Practice is a Big Deal
After the Great Recession, the financial advisory industry was under greater scrutiny. The Dodd-Frank Act enhanced regulation and oversight of advisory agencies in the name of consumer protection. Though there’s been some back-and-forth on some of the details of the Dodd-Frank Act since its introduction, most of its provisions and specifications remain in place.
Financial advisors should prepare to have more eyes watching the entire financial sector, especially about disclosures, fees and commissions, and potential conflicts of interest. The best way to prepare is to maintain an exact set of ethical standards and stick firmly to them.
2. The Economy Is Unpredictable
The impact of unpredictable events and trends has always been factored into financial advisor insights. Still, it’s difficult to overstate how unanticipated events have impacted the financial industry since 2008.
Besides the Dodd-Frank Act, financial advisors faced several unexpected headwinds in the last 15 years. The COVID-19 pandemic alone was a significant and career-altering event for many financial advisors, who had to work even harder to keep their clients’ finances afloat.
On top of that, new legislation, like the SECURE Act and the SEC Reg BI Act, affect how financial advisors can operate. International events like Brexit have impacted the global industry, and concerns about climate change are influencing some advisors to incorporate Environmental, Social, and Governance (ESG) investing into their clients’ portfolios.
Financial advisor insights of today would likely tell their younger selves to plan for bumpy rides and diversify their financial skillset. However, the silver lining remains that in times of uncertainty, financial advisors play a key role in the lives of their clients.
3. Look Out for Bright, Shiny Objects
Imagine telling your younger self that, just a few years down the line, some investors would create, buy, and sell units of digital currency, while other independent investors would pour money into declining corporate businesses like GameStop. In both those cases, speculation and interest was fueled by gigantic social networks and attractive graphics.
Cryptocurrency and meme stocks were just two of the trends financial advisors had to account for in the last decade. While some investors dove head-first into digital assets, others resisted them (or at least told their clients to do so).
Today’s financial advisors will tell you that emotional investing can be detrimental to financial planning. As new things like cryptocurrency come into the market, it’s important to gather data or insights that guide your decisions (not just a post online). With intentional research and planning, you can differentiate the “bright, shiny objects” from valuable opportunities.
4. Consider a Career in Retirement Planning
In 2008, the oldest of the baby boomer generation reached age 62. Since then, the population of retired people has grown incrementally every year. That growth corresponds with the need for more retirement planning, and some of the unique considerations retirees need are estate planning, taxation on retirement accounts, healthcare costs, and housing concerns.
Financial advisors come in all stripes, but 15 years ago, a young advisor would have been well-served by entering the retirement planning field. Looking ahead, retirees may have more investment options for which they’ll need sound financial advice.
The Future of Financial Services
Financial professionals have had to be fluid and adaptable over the last 15 years, and there’s a strong chance that won’t change any time soon. The financial advisor’s insights of tomorrow could be very different from today’s, so getting a head start is essential.
If you’re an advisor seeking ways to grow your business and prepare for the road ahead, download Concorde’s free e-book about what may be on the horizon, or contact Concorde to learn more.