Survey: Among Other Traits, Successful Advisors Favor A Fiduciary Standard

What makes a successful advisor? Nationwide has been trying to answer this question through its 2019 Advisor Authority Report. What they found through their conversations with over a thousand advisors is that, like a good recipe, there are many ingredients to make a successful advisor, among them a desire for a strong, uniform fiduciary standard.

Defining Success

Before Nationwide could study the traits of successful advisors, Head of Nationwide Advisory Solutions, Craig Hawley had the difficult job of defining success for this study. The team at Nationwide defined it by two key characteristics.

1. High earning advisors – $500,000 in personal income annually from their advisory practice
2. High AUM advisors – Advisors who managed $250 million or more in assets.

Among the advisors surveyed, 766 were RIAs and fee-based advisors with 48% identifying as millennials, 33% identifying as Gen X and 18% as baby boomers.

Hawley said there is a trend that he and his team have noticed over the years working on the Advisor Authority reports.

“We have certainly seen over the years that these more successful advisors believe in a fiduciary standard and would like to see one, uniform standard at the federal level,” Hawley said.

Of course, holding themselves to a fiduciary standard isn’t the only trait that’s made them successful. The report concluded that there are seven key traits all successful advisors share.

1. Putting Clients First

Successful advisors more likely to turn down clients they can’t effectively serve. Because these advisors now who their niche audience is that they want to serve, they are able to pass potential clients on to someone who can better serve their needs.

“In a lot of ways they’re putting clients first when they turn down clients because they’re saying, ‘look you’re not going to get what you need from me,’” Hawley said.  “I think that’s example of understanding what my niche is as an advisor where I am going to add the most value. If I can’t solve your need, I’m not going to put you in a bad position, I would rather have you go find someone who can.”

In fact, successful advisors were somewhat more likely than all other advisors to agree that there should be one federal fiduciary standard across the financial industry. (82% vs. 74%) They are also far more likely to strongly agree (55% vs. 39%).

2. Be A Tech Innovator

Successful advisors know how to use technology to their advantage.

“Over the years, they’ve employed technology more effectively than the less successful advisors, Hawley said.

Now, advisors are starting to scale back on that because successful advisors have learned to optimize technology, Hawley said. He added that AI is having a growing presence in advisory practices.

By recognizing the value of adopting new technology, successful advisor are a step ahead of all other advisors in integrating Artificial Intelligence. Forty-one percent of successful advisors have integrated AI into their practice and 26% have robo-advisors 26% vs 17% of other advisors.

While successful advisors utilize tech more efficiently, they don’t adopt it simply because it’s the latest development. Hawley noted that successful advisors have adopted a “CEO mentality” when it comes to the efficiency of tech and their practices – if it doesn’t raise the bar substantially higher, successful advisors will question whether or not it is worth the disruption.

3. Have A Plan To Protect Clients

As market volatility persists, successful advisors are already thinking ahead and proactively preparing strategies to protect their clients. In fact, they are more likely than all other advisors to have a strategy in place to protect their clients against market risk (94% vs. 86%).

“Not only do successful advisors tend, more often, to have a plan, but they are deploying more sophisticated strategies,” Hawley said. “It’s not just diversification and asset management. It’s using things like annuities and liquid assets, just things that are a little more sophisticated than a balanced allocation.”

Other Traits

Other key traits of successful advisors were found by the report and included:

1. Stay one step ahead – Successful advisors not only spot trends, they set them while other advisors tend to stick to the status quo.
2. Commit to an exceptional customer experience – Successful advisors know that commitment and communication are crucial to delivering a one-of-a-kind customer experience to their clients.
3. Target new clients and retain heirs – Successful advisors know that growing and maintaining a strong base for the future means targeting a new generation of clients as well as the heirs of current clients.
4. Be bullish on M&A – Adaptability to a key trait of successful advisors. Being malleable on industry trends mean growth for their firms and clients.

AdvisorNews Managing Editor Cassie Miller may be reached at cassie.miller@Adnewsfeedback.com. Cassie has an extensive background in magazine writing, editing and design. Follow her on Twitter @ANCassieM.