During times like this, many investors feel nervous. Indeed, the University of Michigan’s consumer sentiment index is at its lowest level since it started reporting in 1977. That means people feel bad about the stock market and if you feel bad about the stock market, who do you talk to about it? I recall meeting with a client a few years ago during a time the markets were experiencing a downturn. They said that they were not logging into their portfolio to look at it and didn’t want to know, that they would rather turn a blind eye. I told them that, in fact, that strategy was not the worst thing to do if the portfolio had a robust plan in place, was well-diversified, and was invested in line with their time horizon. I suggested that logging in every day would only serve to add to their anxiety and increase the risk of hitting the sell button as the fear of falling prices grips. This is a normal emotional reaction for anyone.

I sought to reassure my client that they were not alone and, as their advisor, I could provide that reassurance and the guidance to stick to the plan and stay the course. Our discussions were more therapeutic in nature, and it was good to talk through the emotions of investing.

Reflecting on this meeting and similar conversations I’ve had, I wonder how many people feel the same. And are they trying to go it alone or do they have an advisor? Which, for me, calls into question whether they have a good advisor or not. In this article, I want to explore the idea of what makes a good advisor.

Many firms survey clients to determine overall levels of satisfaction and to help drive decisions as to what improvements can be made to their approach to build upon those levels. There are also many industry studies, such as the annual World Wealth Report by the Capgemini Research Institute, which examines global wealth evolution and trends whilst surveying clients on their views. Whether this is an industry or firm-led survey, the common denominator is the client and their view, and it is therefore, appropriately, the client who determines what makes a good advisor. In these survey responses, six themes, which also align with our six core values—and why we feel so strongly about them—have emerged over time, suggesting that these interchangeable facets make for a good advisor.

The first is Excellence. Clients overwhelmingly want to deal with professionals who consistently demonstrate the highest standards of expertise. Professional designations and accreditation are held in high regard and advisors who are passionate about their personal learning and growth typify these standards.

Secondly, we have Empowerment. Never underestimate the value attributed to financial education. It not only helps to provide clarity and context for better understanding, but most importantly empowers others to make informed decisions about their finances. After all, an advisor is not advising on their own money, so empowering clients builds confidence in the outcomes they are trying to achieve. A good advisor understands the importance of building a partnership around education.

The third facet that makes for a good advisor is Engagement. A client who invests their money as well as themselves in the relationship with their advisor makes for a richer experience all around. Advisors who take a proactive, engaged approach versus are active one experience a positive correlation: the more engaged a client is, the more trust they place in the advisor to manage more of their assets.

Empathy is the fourth principle. Good advisors understand that their clients may have made mistakes, such as an investment having gone wrong, overspending, or not saving enough. Rather than trying to provide a “fix” or single solution, seeing mistakes as opportunities to learn and grow ultimately helps clients. Outside of their family and direct relationships, a good advisor is someone they can depend upon as a confidant and consultant on many aspects of their personal life.

The fifth in our group is taking an Ethical approach, which should not be forced and come naturally. The role of a wealth advisor is that of a fiduciary, which means always acting in the client’s best interest, no matter what. Treating people with respect and taking time to do something the right way as opposed to cutting corners leads to better outcomes every time.

Finally, let us not forget that this is a relationship. Enjoyment is therefore a key element in determining what makes a good advisor. Positive energy is powerful stuff. Clients look forward to meeting and spending time with their advisor if they enjoy themselves. One survey response captured this well: “Whatever the current circumstances are affecting my portfolio, I arrive with a smile, and I leave with smile.”

Markets move all the time. They are indifferent to where someone might be in their own life stage. What makes for a good advisor is the overall experience someone has, not performance or fees or range of products and services. If that experience delivers excellence, empowerment, engagement, and empathy, and is ethical and enjoyable, then chances are that it is being delivered by an exceptionally good advisor.

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Check out recent The Financial Commute episodes featuring Jon: 

Ep. 7 Restoring Stability in the UK

Ep. 5 Is Home Country Bias Real?

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