register now for McGowanPRO Alerts

Education is your best defense in guarding against professional liability claims.  Sign up for our Email Newsletter and receive Alerts, Articles, and White Papers on protecting and managing your practice.

Related Articles


3(38) Fiduciary Status; Managing your Liability

Steps Investment Professionals can take to Avoid Claims


14 critical mistakes advisers will make next year

From ignoring social media to being unable to delegate, advisers who fall into these traps will fail to thrive


Original article appeared in Investment News and is reposted by permission of Robert Sofia, CEO & Co-founder of Plantinum Advisor Strategies,

The financial industry is evolving rapidly and advisers need to evolve with it. Each new year brings fresh challenges and opportunities that can be stepping stones to greater success, or stumbling blocks to failure. What are the 14 biggest mistakes advisers will make in 2014? Let's count them down.

14. Forgetting about the next generation

Generation X and Millennial investors will inherit more than $41 trillion by 2052, and even now, 29% of wealthy investors are under age 50 and control 37% of investible assets. In spite of this, most advisers still focus their marketing efforts on aging baby boomer clients whose wealth will gradually diminish as they draw down their retirement accounts. What's left over, plus any hard assets and life insurance payouts, will go to their children. As it stands today, though, those children won't be using their parents' financial advisers. Surveys show that 86% of them will move the money to new advisers. This should be a wakeup call for advisers who want to make sure their book of business will stand the test of time. 2014 is the year to start engaging clients' children in a big way! Advertisement

13. Keeping an outdated template website

Most of the adviser websites I see feature the same garbage stock photos of retired couples riding bikes on the beach, dueling bulls and bears, Wall Street signs, or white columns that are supposed to represent who knows what. What's worse, the majority of the content on those sites usually consists of irrelevant articles written ten years ago by someone who doesn't understand our business. In many cases, the advisers I help with their websites are even using similar templates as their competition! 2014 is the year to throw cheap template websites out the window. Today's consumer is more discerning than ever. They crave unique experiences, authenticity, and valuable information delivered in bite-size, visually appealing, and interesting ways.

12. Not investing in better technology

Right now, your competition may be the adviser on the next block, but in a few years, it will be the robo-adviser. New tools like and Personal Capital Corp. are giving consumers access to consolidated reporting for all their accounts online, cheap or free investment advice, and intuitive technology that blows what most advisers offer out of the water. Advisers who haven't invested in mobile-friendly technology that allows their clients to see all their holdings with the click of a button on a smart phone or tablet are behind the times.

11. Pretending social media is just a fad

Every respectable report being released shows that social media is here to stay. In just eight years, social media use among adults has increased more than 800% according to the Pew Research Center's Internet and American Life Project, and I could cite 100 more studies that confirm the same thing: Social media is not just a fad. While it is not the silver bullet marketing strategy that some "experts" purport, it is a valuable communication tool that millions of people use daily. Like the telephone and e-mail, financial advisers should use social media to communicate with their clients, build their brand, and find new prospects.

10. Not using video to market

When it comes to being on the cutting edge of marketing, video is where it's at. The average user spends 88% more time on a website with video, and e-mail marketing featuring video can increase click-through rates by more than 90%. Video attracts two to three times as many monthly visitors, doubles their time spent on the site, and has a 157% increase in organic traffic from search engines. Need I say more? Video marketing doesn't have to be difficult. If you can't afford a recording studio or don't have the expertise to operate one, just buy a good quality webcam, spend two minutes recording a stock market and economic commentary for your clients, then e-mail them the link and embed the video on your website. If that's still too complicated for you, call me and I'll walk you through it.

9. Not carving out a niche

Afraid to miss a single opportunity, most advisers strive to make their practice appealing to every potential client. Unfortunately, this thinking is flawed because it overlooks an important fact: Investors prefer to work with advisers who specialize in helping people with situations similar to their own. Business leaders prefer to work with advisers who specialize in helping business leaders. Ultrahigh-net-worth investors prefer to work with advisers who specialize in helping UHNW people. Doctors prefer to work with advisers who help doctors. The bottom line is that the more narrowly focused your niche is, the more success you will have within that niche.

8. Not asking clients what they want

There are many things clients don't share with their advisers, including - according to a recent Securian survey - health concerns, private investments they make, marital problems, debts they have incurred, and even stocks and real estate they have purchased. Furthermore, clients won't usually indicate their communication preferences (type and frequency) unless they are asked. For this reason, advisers should survey their clients once per year and use the survey results to initiate meaningful conversations and improve the quality of the service they provide. In many cases, advisers who survey their clients will even uncover assets they didn't know their clients possessed.

7. Failing to wow clients

People love feeling special and appreciated. While clients are unlikely to talk about the annual review they had with their adviser, they will brag about how he threw them a surprise wedding anniversary party. Advisers who look for creative ways to make their clients gasp with surprise and delight will make a deep impression that will generate referrals. Is their car dirty when they come in for an appointment? Have it washed. Are they laid up with a broken leg? Send dinner over. New grandchild? Give them a 'World's Greatest...' hat or sweater. In the words of Ken Blanchard, "Just having satisfied customers isn't good enough anymore. If you really want a booming business, you have to create Raving Fans."

6. Not hosting social events

Client social events present the perfect opportunity to meet new prospects without spending a lot of time or money, but many advisers aren't having them. To host your own social event, simply plan an activity you enjoy and invite a few clients along. You could go fishing, golfing, or skeet shooting. You could host a cooking class, a pedicure party, or a wine tasting. All you have to do is plan the event and pick up the phone. Call a top client and say something like: "I'm playing golf at my country club this Friday and I wondered if you'd like to join me? Great! Why don't we make it a foursome? You bring a couple friends, and I'll pick up the tab."

5. Not having a minimum client account size

The idea of turning away a client because they don't have enough money is scary for many advisers, but is the key to success for others. Our research has found that even having a minimum as low as $50,000 can help advisers attract larger clients. When you put a minimum in place and stick to it, you send the message that your time and energy are worth more than the Joe Shmoe financial adviser down the street. In addition, having a minimum can spare you from taking on multiple smaller clients who can place a significant drain on your time and profitability. While reasonable forethought and planning is required, if you pick the right dollar amount, communicate it properly, and notify your clients in the correct way, you will improve your business by having a minimum.

4. Underestimating the value of coaching

Most advisers are used to being their own boss, but top-performing advisers know they can benefit by having an impartial and experienced confidant who can hold them accountable while teaching them to think and act differently. The right coach can help an adviser work smarter instead of harder, enhance client relationships, attract and retain the right staff, and ultimately expand their business. Not convinced coaching will pay off? Boston-based research firm Cerulli Associates Inc. recently completed a study that quantified the value of using a coach. Within the group of advisers they studied, those who used coaches generated average annual revenues of 28% more than those who did not, even though both groups had comparable levels of assets under management and were studied under identical time-frames.

3. Working in the business instead of on the business

It can be a real challenge for advisers to meet the demands of running their business, building it, caring for their clients, and maintaining a personal life at the same time. For this reason, many advisers struggle to balance time-sensitive duties like placing trades, returning voicemails, and checking e-mails with other vital activities. Every adviser should block out dedicated hours in his or her schedule each week for business planning. This time should be used exclusively for tasks like analyzing profitability, marketing planning, evaluating employees, and reviewing and setting goals.

2. Failing to delegate

Advisers who want to take their business to the next level must shift their priorities so that 100% of their time is spent on things they are uniquely qualified to do. If something can be outsourced, delegated, or eliminated, it needs to be. This is one of the critical factors that sets top performers apart; they know their time must be focused strictly on revenue-generating activities that can't be delegated. Granted, it costs money to do this - staffing assistants, paying for research, hiring outside firms to help - but it's a vital business investment. The only activities advisers should engage in are the ones directly connected to managing existing client relationships and creating new ones. Proper delegation can dramatically enhance growth and improve quality of life.

1. Not developing a written plan

While most advisers will waltz into 2014 without a written plan, elite advisers will commit their goals to writing. When you invest the time to put your plans in writing, you demonstrate intention and commitment, make your ideas more concrete, find clarity, build your confidence, and increase your likelihood of achievement. The process doesn't have to be long and painful. Just one hour with your computer may be enough. If you're not sure what to include, review the 14 points in this article and there's a good chance you'll find a few you'd like to incorporate.


Kaizen is Japanese for "improvement" or "change for the best." It refers to the practice of focusing on continuous, even incremental, improvement in business - something all advisers should strive for. If you can't address all 14 points in this article right away, just pick a couple, or even one. A commitment to continuous improvement coupled with a determination to avoid making unnecessary mistakes will surely lead to achieving greater success in 2014!