The bear market has taken its toll on many portfolios. And every day you probably speak with clients who ask what they should do. Do you respond like most of the other advisors in town and tell your clients that they should just sit tight because better times will come? If that’s the best you can come up with, then what separates you from the other guys? Why not take the proactive approach and standout from the crowd? You will never be a top financial advisor, or even better than average, if you don't have a philosophy, a discipline and approach, that differs from everyone else.
Clients are looking for help and top financial advisors provide it. But what kind of help do they want? Maybe they’re bored, angry, or frustrated by the high expense ratios, style drift, and tax-inefficiency associated with their mutual funds. Before the big market drop, just about anyone could make money in stocks, and some investors may have felt that they didn’t need you. Now they’re scared. Economic uncertainty is as great as it’s ever been. The need for top financial advisors is at its height but will you be among them? This increased demand presents an opportunity for you to position yourself as a valuable advisor. However, you’ll have to earn your keep.
To provide value for your clients and be a top financial advisor, you’re going have to show them how to squeeze more out of their investments and how to eliminate the pain that they may be feeling. This might require realigning portfolios to increase their probability of recovering losses and learning how to take advantage of market upturns. As obnoxious as he is, watch Jim Cramer. Would most people want him as their financial advisor? if so, then what traits can you copy or borrow?
There’s a good chance that you may have to convince some of your clients that all companies in an industry are not the same. For example, the technology sector has taken a beating because of poor earnings and a few crooked CEOs. Don’t let that discourage your clients from investing in technology stocks. Could some of these companies be ready to rebound? Perhaps the current river of troubles is over for this group. Should your clients have some money in these companies? To find them though, you will have to do your homework. The problem is, mot financial advisors want someone (e.g. their firm’s research analysts) to tell them want to tell their clients. That won’t cut it. Top financial advisors do their own homework.
Subscribe to Value Line. Warren Buffet and Peter Lynch gave it a “thumbs up.” Look at the stocks, including the tech companies, that are ranked #1. Some of them have several years of cash to outlast this bear market and can be poised to make significant recoveries. Most of the work is done for you but using this source will have you beat the pants on just about all analysts and mutual fund managers.
Are you familiar with the CAN SLIM investing method? It was developed by William J. O’Neil, founder of Investor’s Business Daily. The third edition of his book How to Make Money in Stocks - A Winning System in Good Times or Bad will teach you which stocks are poised to outperform. This is not based on some opinion’s but on tested and proven criteria to isolate stocks that are ready to outperform. Many top financial advisors use this method for their own portfolios.
The Dow Dividend System is another strategy you could use to work closer with your clients. Any disciplined system, rather than the more common ad hoc approach, is the hallmark of a top financial advisor. The approach only requires an annual adjustment and will let your clients invest in well-known companies that may be undervalued. Plus they’ll get a decent dividend. Some financial institutions have felt so strongly about the Dow Dividend System that they developed their own UITs built on this technique. And a recent article in Forbes stated that now could be the time for this group of “Dogs of the Dow” to come back. This system also beats the market and just about all fund managers on a risk adjusted basis.
Clients need hand holding and a firm hand to do the holding. If you want to be a top financial advisor, it’s up to you to have a strong opinion, a disciplined approach and be the leader. And they may have to make adjustments so they won’t outlive their assets, which could be a tough pill to swallow. This could mean that a higher percentage of their money will need to be invested in stocks in an effort to extract a little more from their portfolios.
By taking the proactive, structured approach with your clients, you show them that you actually can add value as top financial advisors do. You will be viewed as an advisor who manages money, not just the mutual fund salesperson who turns their checks over to an unknown entity on the other side of the country. This will, however, require an investment of time and a little money on your part by subscribing to systems with winning track records.
No one can predict the future, and you shouldn’t proclaim that you can. But don’t take the easy way out either and tell your clients that they’ll just have to be patient or hand their dollars over to a fund manager. Help them recover loses and position their portfolios for a rebound. The payoff will be that they’ll have the best opportunity to make money in the long-run, and you’ll be seen as their trusted, knowledgeable top financial advisor.