The Making Of A Financial Advisor: Financial Advisors' Daily Digest

by: SA For FAs


Kevin Wilson puts advisors under the lens, also drawing lessons about investors in the process.

John Lohr discusses how to choose an advisor (while generating interesting reader feedback).

DoubleLine’s Jeffrey Gundlach has positioned his portfolio conservatively, has underperformed the bond index YTD and now advocates selling everything (except gold and gold miners).

Regular readers of SA contributor Kevin Wilson (including yours truly - a big fan) appreciate his measured and analytic approach to the topics he addresses. His focus is clinically precise, as though he were placing his subject under a hand lens and noting his observations in a notebook like a scientist in the field. That's an inside joke of course because, as his regular readers know, he is a petroleum geologist by training who pivoted to become a financial advisor after a few energy busts busted his intended career.

That history makes his latest article on how he made the shift to financial services (with all that that entails in terms of the knowledge, skills and behaviors he would have to acquire) a fascinating read for other advisors and investors alike. The former will get an invaluable outsider's perspective on what their career looks like to one whose former professional mode of conduct was quite different; the latter will get a better understanding of how it is that an advisor helps people such as themselves. I'd suggest that the following quote serves both ends:

The average client (or human), whatever their net worth, is often profoundly irrational when it comes to the way they think about money and risk…

I might add that this is also a challenge for physicians and other medical professionals, because their patients commonly don't listen to their advice, even when it is a life or death situation. So the constant need in my new career for people skills and persuasion (based at least in part on appeals to other people's emotions) was for me a somewhat shocking and disconcerting aspect of financial services work, one for which I initially felt manifestly unqualified. I soon learned that appeals to logic were only partially successful, and then only in the best of circumstances. However, there is a way to get people to slow down and think about things, giving more logical arguments or concepts more time to become accepted."

Here Wilson reveals that an advisor's key job is to educate his clients to adopt behaviors they might not normally be disposed to, while informing investors that, from a practitioner's standpoint, they're primarily driven by emotions rather than cool-headed analysis.

Many commenters on the site have resisted this finding, but it comes in this case from 23 years of "scientific" observation of investment clients!

Your thoughts, as always, are welcome in the comments section.

Meanwhile, here are some advisor-related links with which to start your week: