We learned a lot from the COVID pandemic. For instance, during the shutdown period we found out which jobs were considered vital to society. Some people discover that their work was “essential” while others were stunned to find theirs wasn’t.
As a financial advisor, you are very essential to your clients. You provide them with valuable insights and helpful information as you guide them toward their personal goals and dreams.
Our profession has certainly seen its share of change in recent years. Software and technology are creating new opportunities that wealth managers could only dream about a decade or two ago. I write quite often in this blog about the many ways automation can improve your daily routine by freeing you from mundane paperwork chores, better managing your daily schedule, and producing blocks of time you can use to get better acquainted with your clients.
But no matter how smart software grows, regardless of how powerful artificial intelligence becomes, technology can never replace the human equation. In a time of rapid downsizing amid increasing automation, your job will NEVER go away. Here’s why:
First, when it comes to making important decisions, humans are irrational. This is borne out by scientific research. The results of one study are particularly intriguing. It looked at how an individual reacted to saving $7 on a pen that cost $15 compared to how the person reacted to savings $7 on a suit of clothes that cost $450. Guess what it found? Although the amount saved was the same in each instance, participants’ reaction was not the same. They were more likely to take advantage of the savings for the pen as opposed to the suit. Despite the amount being the same, the action taken was not. Showing how we, as humans, are irrational in our thought process.
What does that mean to you as a wealth manager? Your clients face a challenge when it’s time for them to invest. Economic and investment theory is based on a rational decision-making process. Emotion should play no role in it. Yet all too often, emotions do indeed come into play and obscure logic and reasoning.
This is where your expertise as a financial advisor is invaluable. You can provide the clarity and emotion-free analysis your clients need when making important choices that often carry long-term consequences. In fact, providing such guidance is one of your core functions. You provide a sounding board for them — a service no machine can provide. Your empathy and understanding enables you to understand where they are coming from, recognize the emotional forces at play, and then assist them in both remaining rational and in making solid decisions.
Always remember, our upbringing impacts how we view situations and make decisions. No matter how much we may want to be different from our parents and grandparents, what we saw early on stays with us forever. Someone’s circumstances may change, but their decision-making process never does. That can lead them to spend too much or too little money or even refuse to invest for their future.
Which is why the human support you offer is irreplaceable. No machine can ever take the place of human understanding; no software can ever provide encouragement; no machine can fathom the influence of a client’s upbringing, much less devise a strategy to deal with it.
The best way to make the most of the human advantage is to create client relationships that encourage openness. That means spending time with your clients, asking lots of questions, and then listening closely to their answers. It means not only knowing what your client hopes to accomplish with investing but why they are investing. Such as funding their retirement, paying for their children’s college education, or opening their own business. Such insight enables you to better help them navigate their hesitancies and fears, overcoming obstacles from their upbringing, and riding out the rough seas of down markets.
The geniuses of Silicon Valley have come up with incredible devices that do amazing things. But they will never be able to create something that can take the place of you!