If you’re a new advisor, a rookie mistake can seriously hurt your business. But no single error has to spell the end of your career.
The fittest rookie advisors will survive, according to Keir Clark, branch manager and senior investment advisor with ScotiaMcLeod Inc. in Fredericton: “There’s sort of a natural selection that takes place.”
One-off mistakes made in isolation will not necessarily run you out of business. But if you get off on the wrong foot and make the same mistakes repeatedly, you will quickly find yourself short of making a living.
Here are five common rookie mistakes, and how to avoid them:
1. Working without a plan
Running a business with no set strategy for reaching your goals is a recipe for failure. You must have a clear understanding of where you want your business to go and how you plan to get there.
“It’s relatively easy to get into this industry,” says George Hartman, CEO of Market Logics Inc. in Toronto. As a result, rookie advisors often don’t think about how to set up and organize their businesses the way other entrepreneurs would.
Write out a business plan, Hartman says. Outline how your business will work and what steps you will take regarding operations and marketing initiatives.
2. Taking on every client
Not every prospective client will be right for your business.
Rookie advisors often take on anyone as a client, Hartman says. As a result, they may feel uncomfortable when prospecting. These advisors are usually not selective — either because they feel they can’t afford to turn away business or they haven’t yet specified their target market.
Define your ideal client as soon as you can, Hartman says, and focus on that demographic. You will feel more confident when prospecting, and so will your prospective clients.
3. Not doing the work
Be prepared to work hard when your practice is young.
“When rookies are getting started it’s pretty much a grind,” Clark says. “They’ve got to be prepared for that.”
Expect to work harder and longer then you probably ever have before, he says, and for very little immediate reward.
4. Failing to budget
As a rookie, you will probably be faced with higher financial highs and lower lows than you expected, Clark says. That’s why it’s important to budget and prepare for a fluctuating income.
“It will take five years to gain recurring revenue,” he says, “and a recurring clientele base big enough to send you referrals.”
5. Remaining passive
Don’t wait for business to come to you, Clark says. Instead, be pro-active in making yourself known in the community.
Attend community events and make cold calls to get to know people in your area, he says. Be selective, showing up at the right events and looking to meet people with investible assets who fit your ideal client profile.
Next: How rookies make excuses, avoid prospecting and sabotage their businesses