A New Perspective

A calling card for most advisors is their experience. Check out advisor bios on the web and years of experience is front and center. We can all agree that we would rather work with an experienced advisor rather than a rookie. However, our world has changed dramatically and an advisor’s experience could be a negative in this new era. Our question is where is experience an asset and where can it be a liability?


The financial services regulators have been hard at work over the last 15 years updating the advisor rulebook. A list of their greatest hits are: 2003 Global Settlement, Regulation FD, Sarbanes-Oxley, Dodd-Frank, and their new hit the DOL Fiduciary Rule! The new rules have a twofold impact on advisors. They increase the difficulty of making investment decisions that can consistently beat the market. The rules can also have a negative impact on advisor profitably. Neither concern the regulators and truth be told most clients won’t be sympathetic either. While the regulator pendulum typically swings too far the financial services industry’s behavior and inability to self-police is partially to blame too. Experienced advisors have adapted to the regulatory changes and accept them. Naive advisors are still stuck on the “good ol’ days”.


Many advisors enter the wealth management business with legacy accounting or legal skills and a list of clients from their previous firms without violating The Protocol. The other group of advisors began their career in the wealth management business and have been trained by their firm or mentored by senior advisors. While accounting and legal skills will endure training and mentoring are flawed and based on yesterday’s news. Brokers are trained to sell the analytical opinions of their firm’s strategists and analysts. As noted in the regulatory section above that expertise is not worth as much as it used to be. The advisors that were mentored in a financial planning firm were trained to provide detailed financial plans and they outsourced the investment responsibilities to firms like Dimensional Funds. While slightly superior to the brokerage approach the Dimensional Funds Three Factor Model mike be getting a little long in the tooth. Both antiquated models make experience using them less marketable. The challenge for advisors and their clients is how to transfer the relevant practices from their old model and complement them with the new tech based tools. Jason Zweig’s recent article in the Wall Street Journal does a good job addressing this reality. Finally, the new skill that breakaway advisors need to develop is how to run a business. Like many skills, it is more difficult that it appears. The best educational resource is the advisor’s own clientele of successful entrepreneurs. Ask them for advice, you might be surprised by their answers.


The enduring component of an advisor’s experience is their perspective gained through living. Each advisor gains great knowledge by working with clients and being a client themselves. Unfortunately all of the recommended strategies don’t always work and negative experiences dealing with the mistakes last longer than positive ones. Older advisors might not be as computer literate as the young advisor but they have the personal confidence to ask for help.

We are all able to convert our dog’s age into the human equivalent. I propose we do the same with experience. Adjusting and converting years of experience into a current figure that helps us compare advisors in 2016 and beyond. Maybe we can find a millennial in The Valley to write us an app.

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