GUEST BLOG: THE PRINCIPLES OF A MINDFUL ADVISOR

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Today’s Ultra is a bit of a first! It comes to you from Luca Farinella, Chief Executive and Founder of V3, an independent Private Office serving the needs of UHNW individuals. 

The World Health Organisation recently described stress as the ‘health epidemic of the 21st century’ which is costing American businesses an estimated $300 billion every year. Anxiety can make it difficult to concentrate, cloud decision-making and affect personal relationships. So understanding the principles for countering it can help professionals to become more effective.

This is nowhere more pertinent than in the context of wealth management. Ours is an inherently stressful industry. Advisors work long hours, deal with complex and uncontrollable market forces and have a huge responsibility to deliver advice that can really affect people’s lives; on issues as broad as investments, family dynamics, passions, professions, health and even death. Despite these pressures, stress is not really an option; clients need assurance that their advisor has a clear head when creating and implementing their financial strategy.

On top of this, wealth for clients can also be a source of anxiety, rather than a source of happiness, meaning that delivering peace of mind is paramount. Their concerns are numerous and broad, linked to issues of security, social engagement and trust. Clients can be overwhelmed by the effort involved in monitoring a complex wealth portfolio and unsure of where to turn or who to trust.

Against these myriad forces, understanding the techniques for managing stress provides a helpful framework for optimising client relationships. If approaches like ‘mindfulness’ can help individuals deal with demanding situations, then its principles can be used to create more effective working practices and also to give clients a more empathic service.

Mindfulness refers to self-awareness and appreciating the present moment – being mindful when your mind is full. It is a non-reactive form of meditation, encouraging us not to cast judgement – good or bad – over the feelings we experience. Instead, we must acknowledge the uniqueness of every situation. Consciousness of our feelings during meditation means they can be recalled and used as a calming mechanism in stressful situations.

This may sound a bit too ‘Zen’ for an industry that has traditionally focused on numbers and figures, but it is strikingly relevant. For example, an acute understanding of our surroundings, moment-by-moment, is essential to delivering relevant guidance to clients of wealth. Good advisors do not have a catch-all approach – but one which pinpoints a client’s needs without assumptions – vehemently veering away from a cut-and-paste culture. Viewing each interaction as unique sits at the heart of what it means to be effective.

There is an old adage about weddings which neatly sums up this client-focused ethos. When group photographs are published from a wedding ceremony, who is the first person you look for? Not the bride or groom, but yourself. This is how clients view interactions, documents and websites. They need to see themselves in the process, and have their bespoke needs reflected back to them.

As advisors, being truly tailored to each client requires us to approach them – as mindfulness advocates – non-judgementally; without anticipating their needs or using pre-determined solutions. Those who receive incentives for selling particular products, who have their performance measured by their ability to reach sales targets or who recommend partners that benefit the same business stakeholders, can never achieve this fully objective approach. As an industry, we must be free from bias to be bespoke.

Now more than ever, delivering a unique approach to clients is crucial. The backdrop of the global financial crisis and subsequent loss of trust in the wealth management sector understandably points towards advisors having to prove their value at every juncture. In the face of such high expectations, staying calm may be the vital ingredient in what is otherwise a frantic world.

James Baraz, a meditation teacher and author based in the US, describes the relevance of mindfulness to handling periods of volatility. He advocates “simply being aware of what is happening right now without wishing it were different; enjoying the pleasant without holding on when it changes (which it will); being with the unpleasant without fearing it will always be this way (which it won’t).”

With every major event – be it the dot com crash, war, the bursting of a credit bubble or even an against the odds win of the United States Presidency – good advisors learn to train their minds not to fear intense change. In fact, the more these events occur, the greater resilience is developed so as to deal with situations calmly, quickly and objectively, channelling this composure to clients.

Figure 1: Timeline of financial crises

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Having a deep expertise in finance, investments and economics can go some way in helping advisors to manage these complex situations, but modern advisors will need a new set of skills to best service clients. For example, emotional intelligence – the capacity to be aware of one’s own feelings and those of others – is an undervalued attribute among wealth advisors.

We manage not only the extreme complexity of a client’s wealth in an ever-evolving context but also their multiple and changing concerns; it’s a job that requires enormous amounts of composure and that is why the principles of countering stress are aligned to the attributes of a good advisor.

Mindfulness advocates developing a mental state that is resilient, attentive, responsive and accepting. These are the very same qualities that enable the very best advisors to deliver the very best outcomes for clients.

Thought for the week:

“One of the symptoms of an approaching nervous breakdown is the belief that one’s work is terribly important.” —Bertrand Russell, British philosopher and logician, 1872-1970

 News from the world of wealth:

Blockchain test could lead to fund sales revolution – Citywire

Sanlam switches on AI in ‘world first’ for fund industry – Portfolio Adviser

How the adviser’s role is being radically transformed – Financial Planning

Managers reconsider use of index providers amid ‘eye-watering’ costs – Investment Week

Blackberry partners with surveillance firm for MiFID II tool – The Trade News

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Author: Luca Farinella, Chief Executive Officer of V3

Luca’s 20 years spent in financial services led him to question whether traditional wealth managers were truly capable of delivering independent guidance that addressed all the needs of a high-value client.

Within V3, Luca is determined to challenge these time-honoured business models. His mission is to ensure that the strategic vision of V3 remains steadfast; to provide clients with a clearer wealth view and a defined plan to achieve their financial goals.

 

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