How to Be a Fearless Advisor


Recorded at the Market Counsel Summit. Presented by: 

"Being a fearless advisor is really about communication, messaging and expectation setting so that your clients can understand what's normal for their portfolio. It's so critical that an advisor not just communicate the basics of one number, like, hey, you know, this portfolio on average should give you 8% a year. You do that, and the client is going to be really upset. If, you know if the number is lower, the client is gonna be really upset. Frankly, if the numbers higher, because the clients gonna be sitting there going, Well, wait a minute, we only made 12% This year, why the markets up? 16? Why? Why did we only make 12?

What's so critical is that advisors communicate expectations to clients with something like what we call the 95% historical range to say, hey, look, there's 5% of the risk we can't quantify for you.

That's things like the 2020 pandemic crash Black Swans. My job as your advisor is to control the 95% of the risks that we can quantify. So six months from today, you know, if your portfolio is anywhere in this range, that's going to be normal behavior for this portfolio, we can say I made the right decision. And at the end of the day, that's what those clients need is the ability to understand that they made the right decision and that their fearless advisor helped them get their fearless advisors really have to start with a good set of tools.

And you know, for us, that's technology. That's that's making sure that they've got the technology to tell their story in the right way. But in all candor, you can tell a story of fearless investing with a whiteboard, and a marker pen. But it's really about helping your client to understand what's normal for their portfolio. And if you can do that, you can help your client have that framework to understand how to react to risk appropriately and that ultimately, is what transforms a fearful investor who makes bad short term decisions into that fearless investor who makes great short term decisions. — Riskalyze Co-Founder and Chief Executive Officer Aaron Klein.

Resources: FP Transitions

Related: Advisors and The Digital Asset Explosion