As we have mentioned before, financial advising today is much different than what it used to be. The questions asked by advisors back in the day were ones that were centered around yielding large gains, but those questions were rarely answered with consistency. These questions are still debated throughout the media to this day — questions like:

  • Where is the market heading?
  • Which financial sectors will see the greatest gains?
  • In which direction are the interest rates moving?

Most of today’s financial advisors will avoid answering these types of questions. Instead, current advisors tend to focus on questions that create far less of an impact but can be answered with much more consistency. These questions can vary, but common ones you may hear are:

  • What is my client’s probable tax bracket?
  • How much cost do I incur with my investments?
  • What is my client’s time horizon?

It is incredible how much the financial advisor profession has changed. Most advisors back in the day tried to answer big-gain questions, while the truth is we can never really tell where the market is going. However, today’s financial planners and advisors focus on controlling only what is within their reach and having a plan ready to participate in the markets. This plan should include what the cost will be and what they are looking to accomplish. To be a successful financial advisor, those in the profession should steer their focus to five main areas.

Establish client’s spending disciple

It is common for people, especially clients, to forget that consumption is the real enemy of investment. In today’s world, we gain more pleasure spending money in the short term than actually saving it long-term. We feed off of instant gratification.  Economical management is a virtue that has been forgotten. Successful financial advisors will help clients develop a budget and establish a spending disciple early on. This will hopefully help with overconsumption over time, something that has been a major problem.

Teach clients to become dedicated savers

When it comes to investing, it is not enough for clients to just live within their means. They need to be committed to a plan that helps them save money and increase the amount they save over time. Limiting debt and paying off a home mortgage early are both great ways to increase their savings over time. Successful financial planners are driven to work closely with clients to help oversee and improve a client’s way of saving.

Control the costs

Costs never really had much of an impact in the investment industry. Recently, however, costs have seemed to move into a main focus within the industry. If costs weren’t looked at as a percentage of assets that are under management, but rather as a percentage of potential gains,they would be focused on more even more. Good advisors and financial investors have pushed the costs to the middle of the investment equation, as it is a factor that they can easily control and manage.

Know the taxes

Taxes are a factor in the investment equation that investors and advisors don’t have much control over. However, that certainly does not mean that they have no control whatsoever. There are plenty of ways advisors can influence their client’s portfolios’ tax efficiency.  Check out some common ways:

  • Assign assets to a tax-deferred or taxable account
  • Choose between corporate — or municipal-bond — funds
  • Purchasing active or quiet-managed funds

Unfortunately, our country is one of the least tax-efficient markets for fund investors. However, wise advisors will closely pay attention to possible gains exposure. These advisors are considerate with events like strategy changes, or other changes that can potentially unlock gains, and they may even focus on less — or even negative — in some cases.

Utilize asset allocation

When you have clients that have become committed to saving it is important to make careful investment allocations. Market forecasters are focused on which stock to choose or which sector will likely see gains. However, a successful financial advisor will steer away from that and instead center their attention on the facts they know about their clientele and their individual goals. To be a good advisor, asset allocation should be linked to the client, instead of the market — something we cannot control.

The above focus areas aren’t topics you’ll see talked about on financial TV, but for financial advisors and planners, focusing on these specific areas can end up creating value. Good advisors will center their attention to these areas, which can help them become more successful in their profession.

Becoming a successful financial planner or advisor is not simple as people expect it to be. Advisors have to balance many tasks, like asset allocation and client interaction. While this can be difficult to handle, AlphaDroid Strategies has developed an effective solution. With the ever-changing market in mind, AlphaDroid Strategies created an asset allocation software that does the time-consuming and difficult work related to financial advising. To learn more about our algorithmic trading system and software, contact AlphaDroid today.