Douglas Adams, an English writer, humourist, and dramatist once said, “To give real service you must add something which cannot be bought or measured with money, and that is sincerity and integrity.”
For clients to stick around for the long term, it is important for financial advisors to build a relationship founded on integrity, ethics, sincerity and prudent business practices.
When a client walks into office of a financial advisor, he hopes that unbiased and research-backed suggestions is given in the endeavour to build wealth. Plus, the financial advisor will exercise enough care and be prudent enough, much as he would be while deploying his own hard-earned money.
Investors are increasingly seeking proficient financial advisors who can offer honest, transparent, ethical, sincere, offer research-backed investment recommendations and who would handhold them in the journey of wealth creation.
So, here are a few things financial advisors can incorporate in their advisory practice
- Follow best reporting standards and disclosure norms: Be vocal about the fees, if any, and commissions earned. When in receipt commission advisors should be fair and disclose it in a transparent and comprehensible way. Effective communication along with simplified reporting and disclosures helps to earn the confidence of investors.
You must follow the documented policies and high standards of reporting and disclosure norms that spell the best ethical practices.
- Shape a culture of transparency and openness: Always maintain transparency, because the role of the advisor has evolved from one of recommending products to one encompassing a more holistic approach and examining the client’s entire financial situation methodically.
Financial advisors must make an effort to foster an open and transparent culture that thrives on ethics in every member of his/her team.
Plus, it is vital for the financial advisor and his team member to be sincere while rendering advice and handle the client’s money with as much care and prudence as one would go about handling one’s own hard-earned money. This will help build trust and confidence to improve the relationship with all clients.
- Ensure there are checks in place: Do have a check and control system in place to ensure mis-selling is eliminated. One could achieve this by setting up an internal control system to audit and recruiting the right people.
The financial advisor must ensure that even his team members or employees, rendering advice to on-board a prospective client, do it prudently.
Providing accurate information and research-backed recommendations to investors is an indispensable aspect of the financial advisory business apart from being transparent and ethical. Also, when the investor has queries, they should be addressed promptly.
- Plan better, set realistic goals and keep abreast of latest developments: As a part of the advisory practice, it is essential to keep abreast of the latest developments in the industry, in the world of finance, new products, rules, regulations; plus read books on investing/finance, op-ed columns, blogs, etc. which can ultimately help render valuable advice and service to clients.
That being said, staying up to date with this constantly evolving industry can be daunting for an advisor, particularly when he/she plans poorly. This, consequently, prevents the advisor from devoting time to research, resolving client queries and may lead to unethical practices -- wherein unknowingly investment solutions that may negatively impact an investor’s financial health are offered.
Therefore, advisors must put to use efficient time management techniques, viz. activity/task timesheets, action sheets to execute each task, and so on.
Endnote: Resorting to judicious practices in the financial advisory business makes a positive impact on the clients. Ultimately it earns the confidence, respect, trust and helps build a long-term relationship with clients, where the financial advisor is looked up to as a financial guardian.
Jimmy Patel is CEO of Quantum AMC. The views expressed in this article are solely of the author and do not necessarily reflect the views of Cafemutual.
