What Makes a Bad Financial Adviser?

Charlie Munger was a great believer in inversion.

Instead of asking, “How do I succeed?”, he asked, “What would guarantee failure?”

When he was in the military, instead of asking how to keep pilots alive, he asked, "What would we need to do to kill the pilots?"

Instead of asking, “How do I become happy?”, he asked, “What would make me miserable?”

So rather than writing another article about what makes a great financial adviser, let’s approach it from the other direction.

What would you do if you deliberately wanted to become a terrible financial adviser?

Here are ten places to start.

1. Look sloppy

Turn up looking like you’ve made no effort. Scruffy clothes. Dirty shoes. Poorly presented paperwork. A messy office. A chaotic Zoom background.

You might argue that none of this has anything to do with your ability to give financial advice, and you’d be right. Unfortunately, clients are human, and they notice signals. If you don’t appear to care about the small things, why should they trust you with the big things?

INVERT = Take pride in your presentation.

2. Be late and disorganised

Arrive five minutes late. Forget what you promised. Send the paperwork next week when you said tomorrow. Make clients chase you. Nothing destroys trust quite like repeatedly failing to do what you said you would do.

Reliability is incredibly boring. It is also an extraordinary competitive advantage.

INVERT = Treat time as sacred. Do what you said you would do, when you said you would do it.

3. Show everyone how clever you are

Use jargon. Talk about sequencing risk, stochastic modelling, standard deviation, tax wrappers and asset allocation until the client’s eyes glaze over.

After all, you spent years learning this stuff. They should know how knowledgeable you are. Except clients aren’t paying you to demonstrate your intelligence. They’re paying you to make their financial lives easier.

INVERT = Make the complicated simple.

4. Assume the answer is always financial

Client worried about retirement? Build another cashflow model.

Client scared about markets? Show them another chart.

Client arguing with their spouse about money? Explain asset allocation.

Many personal finance problems aren’t really financial problems; they’re personal. They involve fear, family, identity, control, purpose and uncertainty. Money just happens to be where they show up.

INVERT = Be human.

5. Make investing exciting

Find the latest fund manager. The clever structured product. The fashionable theme. The investment everyone is suddenly talking about.

Keep changing things. Make your investment proposition so sophisticated that even you need 47 slides to explain it.

Complexity can make advisers feel valuable. Often, it just confuses clients. Simplicity is hard to sell.

INVERT = Build an elegant, simple and repeatable investment proposition.

6. Talk more than the client

You’re the expert, so dominate the meeting. Interrupt. Finish their sentences.

Ask a question and start preparing your answer before they’ve finished theirs.

The quickest way to miss what somebody actually wants is to spend the entire meeting demonstrating what you know. Great questions are useless without great listening. Words are weapons.

INVERT = Talk less. Listen more.

7. Make every client fit your process

You’ve built a beautiful process, so make everybody follow it. Same meeting. Same questions. Same presentation. Same recommendations.

Efficiency matters, but clients aren’t widgets travelling down a production line. The process should be consistent. The experience should feel personal.

INVERT = Standardise the process. Personalise the person.

8. Only contact clients when you need something

Annual Planning Meeting coming up? Give them a call.

Need a signature? Send an email.

Markets crashing? Perhaps hide for a couple of weeks until things calm down.

A bad adviser communicates according to their own diary. A great adviser understands when the client needs them. Often that is precisely when there is nothing to sell, sign or review.

INVERT = Be present before you are required; continued touch points.

9. Try to predict everything

Tell clients where markets are going. Tell them when interest rates will fall. Tell them which government will win. Tell them what AI will do to markets.

Then quietly forget those predictions when they turn out to be wrong, which they likely will be. Your value as an adviser isn't knowing what happens next. Nobody does.

Your value is building a plan that can survive whatever happens next.

INVERT = Prepare rather than predict.

10. Make yourself indispensable

Keep everything in your head. Create dependency. Make clients believe their finances are impossibly complicated and that only you can understand them.

It might feel like good client retention. But the ultimate purpose of advice shouldn’t be dependency. It should be confidence.

A great adviser leaves clients feeling clearer, calmer and more capable than before they walked into the room.

INVERT = Create confidence, not dependence.

Invert, always invert

Perhaps becoming a great financial adviser isn’t about discovering another revolutionary framework. Maybe it’s simpler than that.

Look at the behaviours that would make you terrible at the job. Be sloppy. Be late. Be complicated. Talk too much. Chase shiny investments. Predict the future. Treat everyone the same. Communicate only when it suits you.

Then turn each one upside down.

Present yourself well.
Respect people’s time.
Keep things simple.
Listen deeply.
Stay human.
Invest simply.
Personalise the experience.
Communicate when it matters.
Prepare rather than predict.
Create confidence.

There probably isn’t a perfect formula for becoming a great financial adviser. But working out how to become a terrible one? That’s surprisingly easy.

Then just invert.