Revisiting ‘The Excellent Investment Advisor’ – Part 2, A Millennial Perspective

My colleague Sam wrote a piece last week about the impact of Nick Murray’s landmark book – ‘The Excellent Investment Advisor’. It’s undeniable that this book has had a lasting effect on the thinking of financial advisers since it was first penned in 1996 with many of Murray’s predictions proving to be accurate in the time that’s passed since it was published.

As the youngest member of the First Wealth team (I was only 3 years old when the book was published) I wanted to add a few thoughts from my own perspective – that of a young financial advisor who has just entered the profession. In some ways, it’s difficult for me to compare the current climate with the world that Nick Murray’s predictions emerged from. A commission-led, transaction-based, market-focused industry was not something I ever experienced in practice. In fact, the first observation I think I’d make would be to question whether I’d ever have ended up as a financial advisor at all had the industry not changed in the ways he predicted. A case in point is relationships.

Doing Well While Doing Good

Building strong, positive and long-lasting relationships with clients is one of the primary reasons I’m working towards becoming a financial advisor. It makes up a big part of the job satisfaction I get from my role here at First Wealth. It’s important to me to feel like I’m doing good as part of my job. Like many graduates, I was not particularly driven to make money for myself. It’s more important to make a positive contribution and enjoy work. An article in Fortune magazine in 2015 defined what millennials seek in a career:

“…more so than previous generations, millennials place great importance on social causes and sense of purpose – and they define that purpose two-fold. The first is self-purpose; how do they fit into the organizational puzzle? How is their work relevant? The second aspect is the purpose of the company. How does the company relate to the wider world, and what good does it contribute? Does the company’s concern with social responsibility match theirs?”

In the Deloitte Millennial Survey of the same year, six out of ten people reported that a ‘sense of purpose’ was part of the reason they chose their current employer. It’s certainly true for me and, as Murray would say, it’s possible for an advisor to ‘do well while doing good’ for his or her clients. That means he or she can build a successful career for themselves on the basis of an honest and trustworthy long-term relationship with their clients (and not have to be a commission-hungry, greed-is-good stereotype with a dodgy moral compass).

Advisor, Behaviour Coach… Psychologist?

This quote from the Excellent Investment Advisor really resonated with me: “…at the end of an investor’s life, less than 5% of his total lifetime returns will come from what his investments did versus other similar investments. The other 95% will come from how the investor behaved and the primary determinant of that behaviour will be the quality of the advice he got or didn’t get.”

What I’ve learnt, in the early years of my career as a financial advisor, is that you’re often playing the role of a behaviour coach or a financial psychologist. In fact, this can often be the biggest part of the job. As Sam discussed last week, it’s vital that clients stick with you throughout the ups and downs in the market and this is where the behavioural management skills of an advisor become crucial to success, because they can really add value for clients. Sometimes investors can be tempted to react to market fluctuations in a way that ultimately isn’t in their interests or that may not generate the best returns, so the advisor’s role is to attempt to encourage and manage their behaviour with their best long term interests at heart. For a young advisor, this can be a challenge. For example, a 25-year-old advisor with a 65-year-old client needs to establish trust and credibility quickly and comprehensively for the client to feel sufficiently confident to accept their advice and recommendations.

The Future

I think every generation of financial advisor practising today would agree that the connection you make with clients from meeting them in person can’t be beaten. There are thousands of communication channels vying for our attention these days (email, text message, video calling and the whole sweep of social media) but, as a society, we still feel that an online relationship is less personal and somehow less real than a face-to-face meeting. But as a trainee advisor in the early days of my career, it’s down to my generation to be asking – will it always be this way?

What will the investors of the next 20 years’ want from their advisors? What will the personal touch look like to clients who are active on social media? For the up-coming generation – who are maybe just beginning to invest – engagement, relationships and trust may need to include engagement online. How can we provide a personal touch in future? Becoming Facebook friends or liking a LinkedIn post – or whatever the equivalent is in years to come – may be just as personal and important as a hand-written birthday card is today.

Of course, there are many other considerations to take into account here, not least things like security and confidentiality, and the preference of the individual, but it will certainly be interesting to see how the desire for face-to-face engagement evolves, as the social media generation comes of (investment) age.

At the end of the day, what’s important for financial advisers of all generations to remember, and the philosophy we have at First Wealth, is that ours is a profession that focuses on people. We help people achieve their lifestyle goals by having good personal relationships with them. As Murray emphasised: “…it’s about people. It’s not about facts, it’s about feelings. And it’s not about calculating the answers, it’s about making sure you’ve got the questions framed right… And people do not begin to care what you know until they begin to know that you care.”

If you’d like any help or advice with your financial lifestyle planning, please give us a call on 020 7467 2700 or email us at:

This document is marketing material for a retail audience and does not constitute advice or recommendations. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested.

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