While it is true that the vast majority of financial advisors fail, today’s article is focused on advisors who make enough money to survive but fail to achieve their goals.
Before we dive in, let’s review why most financial advisors fail.
If you look at the corporate model of most financial services firms, their business model assumes that 90-95% of advisors or agents will fail.
Because of this, most firms focus their new agents on approaching family and friends (similar to network marketing). They don’t teach them how to manage their mind and identify a niche they love. Or how to track their activity, numbers, and results.
By the time the person has gone through their family members and friends, they are out of leads and have often lost friends in the process.
So what can you do regardless of where you are in the process of growing your financial advisory or money coaching business?
Today, we are diving into the overview of
Why Financial Advisors Fail and What to Do About It
I have run one of the most successful performance masterminds for financial advisors and money coaches worldwide for over 18 years.
While I can’t guarantee results, I can share that we have never had an advisor, consultant, or coach who has done the work fail to have measurable results.
That said, we have members who don’t do the necessary work. As a result of their actions (or lack thereof), they do not achieve their goals.
For example, some want to spend their entire time on financial planning. Others are focused on selling insurance or mutual funds. In both cases, they need to confirm what their ideal client wants.
5 Steps to Succeed as a Financial Advisor or Money Coach
1. Manage your brain
2. Create a plan
3. Identify a niche
4. Master your money and mindset
5. Execute consistently
Let’s begin with the first insight:
1. Manage your brain
When I began in this business over three decades ago, one of the most common sayings was, “Successful people do the things others won’t or don’t do.”
I would add, “Successful people do things they don’t feel like doing” or “Successful people focus on how they want to feel once they achieve their goal as compared to how they feel in the moment.”
People want to achieve a goal because of how they believe they will feel once they reach it. So, you must get clear on your ultimate goal and the feeling you want to experience.
Then, regardless of the day, task, or how you feel in the moment, you stay focused on your ultimate goal and complete the activity required to achieve your desire.
To better understand this, you need to understand your mind.
We will focus on your subconscious and conscious mind for simplification and what gets in the way of doing the activities required to achieve your desired goal.
Your subconscious and conscious mind
The subconscious mind is often called your primal, toddler, or child brain.
Emotions govern the primal brain, including how we feel and what we want. Left unattended, your primal brain will wreak havoc on your business and life. Most people (financial advisors included) live their lives with this part of their brain running their lives.
When you think about it, it truly is insanity. Is there any child you would let run your business? And yet, that happens when we leave our primal brain in charge.
The conscious mind is part of the prefrontal cortex. It helps you focus, plan, set goals, manage impulse control, and manage emotional reactions.
To achieve any goal, you must first know what you want. Then, you need to get your entire brain working together to achieve it.
Neurological Reasons Why Financial Advisors Fail
It is helpful to understand chemical reactions in the brain to understand why we do certain things and not others. These reactions affect our behavior.
Dopamine
One of the most impactful neurotransmitters that impact why financial advisors fail is dopamine.
It is a neurotransmitter associated with motivation, reward, and pleasure.
Dopamine is crucial in the brain’s reward system, reinforcing behaviors that lead to pleasurable outcomes.
Certain actions provide immediate gratification. As a result, dopamine is released, and we feel good.
Examples may include scrolling through social media, watching entertaining videos, or eating our favorite food, creating a sense of pleasure.
This can lead to procrastination if we prioritize feeling good in the moment instead of doing the work required to achieve our goal.
For some, pursuing behaviors that raise dopamine levels can become compulsive and addictive. Examples include gambling, substance abuse, overspending, or overeating.
And while you may not have an extreme addiction, you may have behaviors that keep you from achieving your goal.
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For example, which of these dopamine hits do you regularly experience?
- Scrolling social media
- Checking the number of likes you got on a recent social media post
- Having a snack instead of making your warm calls
- Calling a friend instead of completing your blog post
- Checking email several times during the day
- Playing video or games on your phone or computer
While completing these actions may seem like no big deal, they waste your valuable time and prevent you from completing the activities that will allow you to succeed and achieve your goal.
For example, you have time on your calendar to make warm calls, but you are scrolling social media to see what your friends are up to.
Regardless of the reason, dopamine gives you an instant reward (very similar to the effect of morphine) for completing some activities and avoiding others.
Successful producers focus on their goal and the feeling they will experience when they achieve it. They understand that achieving their goal requires completing activities regardless of how they feel at the moment.
Serotonin
Another neurotransmitter that impacts your actions and results is serotonin.
Serotonin is a neurotransmitter that affects mood, sleep, well-being, and impulse control. Imbalances in serotonin levels can influence a person’s ability to regulate emotions and manage their behavior effectively.
Low serotonin levels have been associated with decreased impulse control and can contribute to procrastination. As a result, it can be hard to resist immediate distractions or delay gratification.
Norepinephrine
Another neurotransmitter that contributes to lackluster results may be caused by norepinephrine.
Norepinephrine is a hormone and neurotransmitter involved in the body’s stress response. It plays a role in regulating attention, focus, and alertness.
When levels are low, it can lead to difficulties concentrating and getting easily distracted.
Cortisol
Another chemical that impacts performance is cortisol. This is a stress hormone released in response to perceived threats or stressors.
Chronic stress can lead to elevated cortisol levels, impairing cognitive function, decision-making, and self-control.
High cortisol levels can contribute to a sense of overwhelm and distractibility, making it more challenging to stay focused and complete tasks.
Psychological factors, such as fear of failure, perfectionism, lack of self-confidence, and poor time management skills, also impact our behaviors. Additionally, environmental factors, such as distractions, lack of structure, or unclear goals, can contribute to your lack of desired results.
Conclusion: Why Financial Advisors Fail in Achieving Their Goals
It is important to remember that chemicals and their effects can influence our behavior. However, they are not the only factors behind failures or procrastination.
Achieving results requires a combination of self-awareness and effective time management.
Examples that can help you increase focus and productivity include:
- Minimizing distractions,
- Breaking tasks into smaller, manageable steps,
- Setting clear goals and deadlines, and
- Practicing self-discipline.
Now that you understand some of the neurological reasons why financial advisors fail, we will review behaviors preventing you from achieving your desired outcome.
Related: Targeting the Affluent: Effective Marketing Strategies for Multi-Family Offices