Written by: Marguerita Cheng
The ability to think and act quickly with precision is a much-needed skill in business and financial planning. The Personal Agility Lighthouse TM model of AgilityDiscoveries co-founders Raji Sivaraman and Michal Raczka lists 7 crucial agilities: education, change, emotional political, cerebral, learning, and outcomes.
What part of personal agility has you concerned or stressed? Let’s take a look at the seven parts and strategies for coping with them.
Financial planners are not regulated as a separate and distinct profession. Any person may hold himself or herself out as a “financial planner” without being required to meet basic competency or ethical standards. Appropriate regulations are needed to require financial planners to meet competency and ethical standards in the same way that lawyers and doctors are required to do.
Professional financial planners and advisors must adhere to competency levels and fiduciary standard requirements to prevent fraud and provide credibility to clients. The fiduciary standard of care requires that a financial adviser act solely in the client’s best interest when offering personalized financial advice. Education should be ongoing, with advisors and planners completing continuing education and refining their skills.
Change is difficult, but constant and unavoidable. As technology and people’s financial behaviors change, so does the need to keep up with the pace of change. Think about what you identify as needing to change. What abilities, behaviors, and skills can you use to increase your personal agility? Networking and interacting with connections in a way that is productive and not stressful is one way to cope with change, as is using feedback from others as a way of improving and setting future goals. As we increase our personal agility, more time and effort can be spent on more meaningful ways to connect to potential stakeholders. Changing demographics encompass the people we serve as well as those serving them. Study the generational makeup of your client list and identify which clients are the Baby Boomers, Generation X, and Millennials. The United States Census Bureau estimated the number of U.S. Millennials in 2015 was 83.1 million. In 2016, the Pew Research Center found that Millennials have surpassed Baby Boomers and represent the largest generation in the United States. They are also expected to hold the largest amount of wealth by generation in the country. A major reason for this expected growth is the impending transfer of wealth from parents to their children. Millennials and Generation Xers stand to inherit between $30 and $40 trillion dollars from the Baby Boomer generation. Millennials have a different set of values from their parents and grandparents. For example, in general they marry later and tend to live with their parents until a later age than their parents. It is crucial to understand what each generation values and what is important to them in order to better serve them.
We’ve also seen a change in the way people receive financial advice. The emergence of robo-advisors, which deliver portfolio management services online with minimal human interaction, give clients easy and instant access to financial advice, but are not able to work, process information, and communicate across diverse perspectives the way humans can. Instead, robo-advisors are governed by computer-generated algorithms and programming. Consequently, robo-advisors don’t use a coordinated approach to financial planning that integrates budgeting, tax, estate, insurance, philanthropy, and investment recommendations. This is where you as an individual financial planner have a leg up on computerized advisors—you have the ability to adapt more quickly and better than a robot. Robo-advisors do not offer comprehensive financial planning or personal customer service.
At the same time, you also have the ability to implement and integrate technology into your financial advisor services. You can work with tech-savvy Millennials and GenXers to customize digital content and tools.
Another aspect of change faced by financial advisors is the evolving regulatory landscape, which necessitates that firms and advisors alike must be proactive instead of reactive. Financial planners need to plan ahead for changes instead of reacting to it. The Bernie Madoff Ponzi scheme and the banking crises of the past decade have led regulators to redouble their efforts to crack down on fraud and stabilize the financial industry. Fee compression and the proliferation of exchange-traded funds (ETFs) and passive investment models are also developments that financial advisors need to be aware of and help educate and advise their clients about.
Finally, as a financial advisor, you can provide the human touch missing if people rely solely on robo-advisors—for example, by consoling family members during estate settlements, which leads us to the third part of the model:
The best wealth managers share a common trait: empathy. Empathy is defined by Merriam-Webster as “the action of understanding, being aware of, being sensitive to, and vicariously experiencing the feelings, thoughts, and experience of another of either the past or present without having the feelings, thoughts, and experience fully communicated in an objectively explicit manner.” Simply put, it is the ability to connect with people on an emotional level.
Empathetic wealth managers can inspire their clients to adopt the positive changes necessary for them to reach their life financial goals. This involves actively listening to their clients by repeating what they say to ensure they understand what their clients are telling them. Empathetic listening encourages a natural flow of information that takes conversations between advisors and clients in different directions that provide the opportunity for understanding of the client’s most intimate fears or concerns, as well as their hopes and dreams. This enables wealth managers to provide more on-target and helpful solutions with clarity and confidence.
In any organization, politics is inevitable. Personal agility allows you to be effective in this environment. Steering multifaceted political waves and navigating toward safe shores without turmoil is like a tugboat that guides and adjusts to reality during political typhoons. Political awareness and cautiousness is a must between an individual, other stakeholders, departments, and the like. Perfect alignment is not realistic, so avoiding overbearing, overriding conflicts within your organization is critical.
The cerebral component of the model involves strengthening your mental agility so that you can process new viewpoints, be prepared to handle difficult or stressful situations, and deliver timely advice. The mantra encouraged by this component is to learn more, read more, and be curious. When you want to have good ideas, you need to have many ideas. Having alternatives and differing concepts is a bonus. Cerebral agility is needed to process and generate new ideas. It is important to reduce mental fatigue, decrease anxiety, and support healthy brain functioning to allow you to provide the best possible services to your clients.
Financial planning does require lifelong learning because the tax laws, financial markets, regulations are always changing. Clients can’t just put their financial lives on autopilot. Financial advisors should use the cerebral component of the model to strengthen their learning ability. It takes courage to accept that your assumptions are wrong, change your mind and welcome new discoveries and learning opportunities.
Another important aspect of personal financial agility is understanding the financial climate and history, and, based on that knowledge, providing insight and helping clients take meaningful action. We’re all familiar with the way the stock market is described in anthropomorphic terms—the bulls and the bears. Then there’s a bunny market—a stock market that zigs and zags but doesn't really go anywhere. When any of these market conditions occur, an advisor should be able to adapt and respond to changes because of the constant ups and downs. Clients want guidance from advisors to explain the financial markets and other financial concepts. It is important for advisors to be able to share their knowledge in a clear and concise way.
Bringing It All Together to reach the Personal Agility Lighthouse TM safely
There is a confluence of factors that prompt the need to be agile (pause and pivot) to stay relevant. All of these macro trends mean that our profession has to be agile and think of different ways to deliver advice. Financial planning is about controlling spending, managing credit, reducing taxes, increasing savings, protecting family and assets, and building wealth for the future. This process entails gathering financial information, establishing life goals, evaluating a client's current financial status, and developing a strategy to help them achieve their life goals. An exceptional financial advisor is a master of the seven pillars of the Personal Agility Lighthouse TM model who can readily identify his or her clients’ needs and provide them with exceptional service and advice that takes into account a rapidly changing financial landscape.