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The Coronavirus pandemic is tough financial advisors and their clients. Developing and maintaining good relationships is the key to long term success. Many people count scouting as one of their experiences in life. Doing right by people has often been referred to as “Being a boy scout.” The twelve points in “The Scout Law” also look like a checklist for being a good financial advisor.
The (Boy) Scout Law is built around twelve points. Girl Scouts have an almost identical version:
A Scout is:
1. Trustworthy. For financial advisors, confidentiality comes to mind. Also acting in the client’s best interests. The “prudent man” rule says advisors wouldn’t take an action “a prudent man” wouldn’t concerning their own money.
2. Loyal. This speaks to forming long term relationships. Good advisors don’t take on clients with the expectation they will walk away once the average client size is larger. They enter into relationships assuming you will be together for a long time. You keep in touch. You are concerned if you can’t reach them, especially if they are older.
3. Helpful. The financial services industry speaks about households. The client relationship doesn’t stop at one person or couple. You want to help other family members, including extended family. If you do a good job for your client and let them know you are growing your practice, they should hopefully introduce you to other family members.
4. Friendly. Many advisors build their practice through referrals. They want the opportunity to meet friends of their clients. Meeting people doesn’t mean they are immediately a prospect. Often, they need to be cultivated. The need may not be immediate, yet you want to be the first person they think of when it’s time to take action.
5. Courteous. Good advisors treat everyone with respect. Although your clientele might be organized into tiers, when you are meeting or speaking with a client, they are the most important person in the room.
6. Kind. Kindness can also be described as patience. Investing is complex. There are few absolutes or certainties. Clients need to understand what they are doing before they sign on the dotted line. Advisors need to take time to explain, often multiple times, before clients understand. They might need to explain it to their spouse or partner. They need to be able to put the concept into words.
7. Obedient. Advisors rarely have discretion over client accounts. The vast majority are self-directed. The client “calls the shots.” Clients are often thinking “It’s my money.” Advisors can’t “tell clients what to do.” Clients must understand and agree. That’s a major reason why “read the order back” is a requirement.
8. Cheerful. There’s plenty of bad news out there. It’s easy for clients to lose hope, wanting to throw in the towel. When appropriate, advisors need to be optimistic. They need to have compelling reasons why holding certain investments or taking the long-term view is the right course of action.
9. Thrifty. This ties into fiduciary responsibility. Regardless if it’s law or not, good advisors are transparent about fees and make recommendations that put the client’s interests first, not the advisors. Over time, if an advisor’s fees and commissions were excessive, someone else, perhaps a competitor, would tell the client. Then they wouldn’t be a client any more.
10. Brave. One of the greatest benefits the advisor brings to the table is the ability to suggest action. Advisors often need to make recommendations based on incomplete information. Left to themselves, clients might defer taking action until they perceive “the risk” is gone. So is the opportunity. Here, the advisor’s experience plays a part.
11. Clean. In this context, clean means organized. They keep good records. They never know when a compliance spot check might take place. They may need to justify the recommendations they made for a client after the fact. CRM software is very useful.
12. Reverent. This can mean several things. It can mean good advisors follow the rules. It can mean they follow the spirit, not just the letter of the law. It can also tie into optimism, belief in a higher power, that somehow, regardless of bleak the situation might look now, everything will eventually work out.
OK, when Lord Robert Baden Powell first published the Scout Law in 1908, there were no robo-advisors, ETFs, hedge funds or algorithmic stock trading programs in existence. However, he wrote it as a code of conduct, how people should treat each other. That advice still applies today.