11 Reasons You'll Fail as a Financial Advisor (2024)

11 Reasons You'll Fail As A Financial Advisor

1. You Won't Prospect.

You won’t make it in business if you don’t get clients, and you won’t get clients if you don’t get prospects. Shocker!

💡 Luckily, my Ultimate Financial Advisor’s Guide to Getting More Clients goes into detail on cold calling, social media, referrals, direct mail and more.

I understand hearing the word “no” is painful. I don’t remember the exact statistic, but I’ve heard by the time we enter adulthood, we’ve heard the word “no” 250,000 times versus “yes” a mere 10,000. Because of this, we learned to associate no’s with not getting what we want, and it hurts.

I hear a lot of financial advisors say they aren’t in sales and they just want to help people. There’s nothing wrong with that, but if you want to increase your business and help lots of people, you have to prospect.

2. You Won't Follow Up.

Follow-up is everything. People are busy, and your best clients will be the ones who are difficult to reach. How many times have you talked to someone for the first time and they said, “Oh, by the way, I want to let you handle all of my investable assets immediately! Where do I sign up?”

Some advisors talk a big game about following up and may even have the best of intentions, but they don’t automate the process or block it in their schedule. If you’re truly committed to building your practice, you’ll make sure nothing is left to chance or falls through the cracks.

Also, according to XANT (formerly InsideSales), half of all sales happen after the fifth follow-up attempt. That means financial advisors who don’t follow up at least five times leave half of their potential income on the table.

Plus, research shows 44% of people give up after one follow-up attempt — if you can follow up just one time, you can place yourself in the top 66% of financial advisors.

ALSO READ: Financial Advisor Follow-Up Tips That Won't Annoy Prospective Clients

3. You'll Let One Bad Experience Throw You Off Your Game.

4. You Won't Decide To Be Great.

Oh yeah, you have to decide you’ll be great.

Getting clients and building a book of business isn’t terribly complicated; it’s simple, but not easy. Still, there are so many excuses people create to avoid building their business — the industry’s changing, people don’t answer the phones anymore, it’s too competitive (we’ll get to that) and so on.

Remember: Whatever excuse you make up in your own mind will be true… for you. It won’t be true for me or your competition, so you might as well give yourself an empowering mindset to help you persevere and succeed.

5. You'll Think It's Too Competitive.

I didn’t say you’ll fail because the financial advisor market is competitive. I’m saying it’s likely if you think it’s too competitive.

Here are two reasons you’ll buy into this false belief:

1. You don’t have a niche. If you’re a generalist, your pool of competitors is huge. If you focus on a narrower demographic, you give yourself a tremendous advantage.

2. You refuse to position yourself as a strong No. 2 in the prospect’s mind. This is a problem for advisors who get discouraged and think everyone already has an advisor. This isn’t bad news — it’s great! These are people who’ve already demonstrated they think it’s important to have a financial advisor. If your competition won’t be a strong No. 2 and you will, who do you think the person will call when their current advisor inevitably screws up?

ALSO READ: 5 Best Niches For Financial Advisors

6. You'll Make The Same Mistakes Over And Over.

When you fail to convert a prospect, do you ask why you didn’t get their business? Naturally, most people don’t. It’s painful and uncomfortable, and it forces you to acknowledge you’re less than perfect.

When you ask “why?” you humble yourself to see what you could do differently next time to improve the result. If it’s something you’re unaware of, you’ll keep making the mistake until someone points it out for you.

If you can measure it, you can improve it, and you should measure everything you can. This includes your number of leads, contacts, follow-ups, ratios and much more. When you have all the data in front of you, you can tweak your process to improve your results.

👉 By the way, if you're not taking advantage of a CRM to track everything you do, read my article about thebest CRM for financial advisors.​

7. Your Outlook Will Be Too Short-Sighted.

If you’re just looking for the next deal to put food on the table, you risk cutting corners or making decisions that aren’t in your best interests for the long-term.

Granted, if you are worried about the short-term and need to make money now, you might have to take side work from outside your target market. However, the money is in the long game: Find a niche and stick with it.

If you target educators, for instance, you may have to take side work from outside prospects to make ends meet at first. But when the going gets tough — and it will — don’t be short-sighted and flip your marketing strategy to match the varying professionals who’ll seek your services.

As long as you keep your focus on your ideal client, you’ll be OK in the long term.

8. You Won't Choose A Target Market.

Do you know how much easier a target market makes prospecting? With an occupational niche, for example — whether it’s nurses, chiropractors, engineers or executives — you could go on LinkedIn, type in your target occupation in the search bar and connect with tons of potential customers.

Because you have a defined audience, all your marketing can revolve around your target. It’s so easy, it feels like a cheat code. That means if you don’t have a target market, you’re making a devastating mistake.

If you need more proof than this website and my Inner Circle newsletter that I practice what I preach, check out my podcast, “Financial Advisor Marketing.” In that podcast, I consistently share stories about how financial advisors can choose niches and become better marketers. In fact, I use the advice I give to attract - you guessed it - financial advisors!

Sure, some people don’t bother with my content. But there’s a clear pool of people who love what I put out, buy my products and support my work. That’s my niche — those are the people I go after.

ALSO READ: Should Financial Advisors Start A Podcast?

9. You'll Underestimate The Effort Required To Scale A Business.

Optimism is a fine personality trait. With that said… it can also sabotage you.

Here’s what I mean: When you’re trying to grow a financial services business and figure out your marketing strategy, optimism is one reason most financial advisors fail.

The hard work that goes into getting clients is just that — very frickin’ hard. In the beginning, your business requires the same tremendous energy you’d need to engineer a train. But once you’ve got some momentum, it’s much easier to keep your business going; all you have to do is stoke the flames here and there.

Until then, roll your sleeves up and get realistic about what you have to do and how long it’ll take. If not, you’ll fall prey to the planning fallacy.

This phenomenon is when someone predicts how much time they'll need to complete a task. Because of their optimism bias, they underestimate the process. When you fall into the planning fallacy trap, you won’t be able to handle the time and effort it takes to grow your business as a financial advisor.

That’s why my rule of thumb is to double your estimates. If you think it'll take three follow-up attempts to reach a prospect on the phone, plan for six. If you think it’ll take five months to get your first referral from a strategic alliance but you plan for 10, you won’t get discouraged after three months.

There’s nothing wrong with being optimistic, as long as it doesn’t interfere with your efforts to build your business.

However, if you see the glass half full instead of empty, your best bet is to just stay in this sweet spot: Plan for the worst, but hope for the best. You’ll still be an optimist, but you’ll also have plans in place just in case the you-know-what hits the fan.

ALSO READ: 10 Catastrophic Ways Financial Advisors Sabotage Their Success

10. You Won't Invest In Yourself.

If you don’t invest in yourself, how can you advise your clients to invest in index funds, mutual funds or annuities insurance? Chances are, you don’t do it as well as you think, and your clients can tell.

When you don't invest in learning new skills, you limit your ability to succeed.

You always need to expand your skillset to learn new ways to succeed. By investing in yourself, you can follow proven paths rather than get stuck looking for answers to questions about building a business that have already been found.

Don’t try to figure it all out yourself — use the time to gain knowledge that grows you externally.

11. You'll Foster Limiting Beliefs.

The foundation of everything you believe in comes from what you feel deep down inside. Believe it or not, your internal beliefs are often more important than skill.
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A byproduct of a lack of self-investment is you won’t believe in yourself. You might think you’re giving it your best shot, but that’s hard to do when you don’t have full confidence in your ability to build your business.

The difference between your performance with and without investing in yourself is evident when two financial advisors try the same material but get vastly different results.

I have the perfect example: After a financial advisor purchased my products, I gave him an exclusive cold calling script I’d never shared. He used it and got incredible results, so I ran a brief experiment. I gave the same script to another advisor, who I considered a pessimist with many limiting beliefs.

As you might’ve guessed, when he tried out my cold calling script for one week, he got no results. Why? Internal hang-ups.

We’ve all been there, so it’s nothing to feel ashamed of. Heck, I built a successful business, but I’m still working through my limiting belief that making money has to be hard. Still, don’t let this be the reason you fail as a financial advisor.

Final Thoughts: Follow The Rules👑​

I’ve worked with countless financial advisors over the years and while there are lots of reasons why they fail, these are seven of the most common.

A lot of failure within the financial advisor industry comes down to either not knowing or not practicing the fundamentals. For example, every financial advisor should prospect and follow up - that’s a fundamental thing. However, when advisors don’t prospect, they put themselves in danger of failing.

I talked about this in the first episode of my “Financial Advisor Marketing” podcast, which was called “Rules for Successful Financial Advisors”. Because just like with anything in life, there are rules you have to follow and if you want to increase your odds of being a successful financial advisor, you should learn and follow the basics.

If you want to subscribe to the podcast, simply search “Financial Advisor Marketing” wherever you listen to podcasts. New episodes go live every Monday.

Remember that nothing happens until you set an appointment. Also, new advisors often fail because they’re impatient and want to get immediate results. Yet, in order to succeed you need to develop a predictable and repeatable process you can use to set appointments and get clients.