Financial Advisors: A Unique Approach Is Essential When Advising Entrepreneurs

Getting to know a client in advance is a sound business approach; getting to know an entrepreneur client in advance is essential. From the first meeting, be relatable and accessible. They want you to advise them, so, take an interest in their professional and personal life.

Entrepreneurs can’t be put in a box – it’s no good labeling them as “just another client,” or you’ll lose their business.

Financial advisors must understand that entrepreneurs are driven by the need to succeed and control their own destiny. Also, entrepreneurs can cope with risk in their business, but the same may not be true of their risk tolerance in investing. Entrepreneurs are passionate about what they do and are probably already looking for the next big opportunity. Understand entrepreneur insights like these and you may be able to build a strong advisory relationship with them.

Entrepreneurs drive innovation. They can kick start economies. Their entrepreneurial behavior is hardwired in their DNA. Still, no two entrepreneurs are the same. Yes, they may have common inherent behavioral traits, but to know and advise them, advisors should educate themselves on entrepreneurs’ multifaceted behavior.

Entrepreneurs are complicated people to have as clients. They’re not looking for mundane advice. Advisors need to learn how to get inside the entrepreneur’s head, to understand the mind and the genetics of an entrepreneur.

Entrepreneurs are wired unlike others. They see risk as a pre-requisite to attempting something new. They go into ventures knowing that if they fail, they’ll just get back up and start again. This view of business, for any financial advisor, will ring alarm bells, but it’s manageable.

The key to successfully advising entrepreneurs is to know the client. With the use of a credible, scientifically based, validated behavioral discovery process, advisors can uncover significant aspects of an entrepreneur’s decision-making approach. When financial personality is revealed, it can be measured, and this data will enable advisors to uniquely manage entrepreneurial clients’ life and financial goals.

When financial advisors understand an entrepreneur’s financial personality and genetic makeup, they will see how entrepreneurs tend to depart from established patterns of thinking. Their resilience and appetite for risk are inherent.

Entrepreneurs are predisposed to have the following characteristics, in descending order of dominance:

  • Resilience – they achieve results, manage setbacks and rationally take quick action;
  • Risk Taker – they confidently take risks and are tolerant of losses;
  • Creativity – they are innovative with ideas and seek to differentiate;
  • Work Ethic and Focus – they pursue goals and are often ambitious and competitive; and
  • Charisma – they understand the importance of connecting with and influencing others to get on board with them.

Even so, being genetically inclined toward entrepreneurialism doesn’t guarantee that an individual will become an entrepreneur or succeed as one. It is just not enough to be born with the entrepreneurial gene, people must activate it.

Financial advisors can dig below the surface to understand the dynamics of the entrepreneurial client and then target advice based on what they have discovered. Behaviorally smart financial advisors should be:

  • Comfortable testing the financial validity of an opportunity;
  • Confident enough to challenge ideas and ask questions; and
  • Trustworthy enough to encourage (yet also confront) when the entrepreneur’s ideas are spinning out of control.

When financial advisors understand that entrepreneurs are driven by the need to succeed and control their own destiny, they are less likely to put them in a prescribed client box. They won’t deliver mundane advice, instead recognizing the importance of educating themselves to better understand the entrepreneurial mind. Remember, entrepreneurs may well think they have all the answers, but wealth creation is surrounded by emotion.

Build trust with them. Most entrepreneurs will reject high-pressure sales techniques outright, preferring to build trust slowly. They will want to know you are interested in what they are trying to achieve and might use you as a business sounding board. But, they will make their own decisions based on your input. So, give them space to think things through.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Hugh Massie

As a Behavioral Finance Insights Pioneer and Identity Trailblazer, Hugh Massie empowers advisers, business leaders, families and individuals to unlock their identity in order to accelerate dramatic change and discover how unknown behaviors – which intensify through un-managed differences, money attitudes, pressure and emotions – derail performance.

Read Hugh's Bio