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It’s estimated that nine advisors out of ten don’t last three years in the industry. That seems high for a career that offers so much promise and potential. Most people come into the business checking all the appropriate boxes for having what it takes. Still, when you consider the gap between reality and expectations of fledgling financial advisors, it begins to make sense why most choose to leave the business.
To put it bluntly, not everyone is cut out for a career as a financial advisor, even for those who do check all the boxes. However, with a better understanding of why many financial advisors quit the business, you can beat the odds by avoiding that fate.
The reasons why financial advisors quit are varied, but here are some of the most common.
#1. Lack of work ethic
It takes a lot of hard work and discipline to break into a career as a financial advisor. While many are willing to work hard for a period of time, fewer are willing and able to maintain the high-level work ethic required to survive and thrive as a successful advisor.
As much as it requires willingness and effort, building a solid work ethic is based on solid habits, such as staying focused, being persistent, punctuality, always taking the initiative, excellent time management, and always striving to perform at a high level of quality, regardless of who might be watching.
Not many people can sustain that level of work ethic. Those who can’t tend to retreat into mediocrity, which is not enjoyable and is often self-defeating. Those who make a conscious effort to build and maintain an outstanding work ethic tend to get the results they need to sustain it.
#2. Poorly developed soft skills
Most financial advisors are not natural communicators. To succeed, they must master the soft skills needed to communicate effectively with prospects and clients. Skills and techniques for building rapport and personal connections, proactive listening, and demonstrating empathy must be learned, developed, and honed, requiring hours and hours of practice. All are needed to build trust and make the prospect and client feel you are client-centered.
Advisors who fail to develop their soft skills have more difficulty converting prospects into clients, leading to underperformance, which is also not enjoyable.
#3. Not investing in yourself
In this business, if you are not constantly focused on getting better, you are actually getting worse because others continually strive to improve. To be successful, advisors must be entrepreneurial, willing to invest in themselves, and always working to perfect their craft.
Advisors who neglect to invest time and money in themselves and become complacent are satisfied with the status quo and are destined to languish in mediocrity. That’s a formula for failure in any career, but most certainly as a financial advisor.
Advisors who take time to learn something new from a mentor or continue to take courses acquire the tools to make them more effective at all aspects of their business, which feeds their motivation to improve constantly.
#4. Trying to be everything to everybody
It’s not uncommon for new advisors to try to cast as wide a net as possible to find more prospects. After all, until they gain knowledge and experience, acquiring new clients is a numbers game. However, at some point, it becomes highly inefficient. And, when you try to be everything to everybody, you become less differentiated and less appealing to the ideal clients you want to attract.
While that approach may fill your pipeline, it doesn’t necessarily translate to more clients—or at least the type of clients you can build a practice around. Successful advisors spend time identifying and developing a niche market to narrow their focus and channel their energy and resources more productively. When they become recognized as experts in a particular field, they are automatically differentiated, and the market comes to them.
The “be everything to everybody” approach is much less interesting and productive and can lead to burnout—a leading cause of advisors quitting the business.
#5. You’re only in it for the money
There’s nothing wrong with becoming a financial advisor for the opportunity to become financially well off. It’s a business that handsomely rewards hard work and dedication. However, if that is your only focus, you may find it challenging to succeed in the long run.
Advisors who understand the lifetime value of each client are always focused on doing what’s best for them and working to provide the best possible client experience. Those advisors are rewarded with additional business and referrals, which are the keys to sustainability in our business.
Advisors who fail to understand that the real profit is in their client relationships, not the fees or commissions they earn, find themselves constantly having to replace clients, another sure path to burnout.
Related: Maximize Your Advisory Relationship with Client-Focused Investing