Most business classes don’t focus on ethics. In fact, including ethics classes in business curriculums is still new. And professors are still debating whether virtue can really be taught in business, or if it is possible to teach at all.
Yet, new business trends are making it important for financial advisors to be taught how to do their jobs ethically. Handling other people’s money to make the most profit isn’t the only job of a financial advisor.
Instead, business graduates may be hired by investment management services. These services are large-scale efforts to attract the most profit for investors, and for the company. And since they’re so big, they involve doing a lot of work.
Yet, more of these companies are offloading the work of financial advisors to outsourced companies. This opens new questions for clients looking to invest in a firm, with the expectation that their money will stay in their own borders. Also, career outlooks for budding financial advisors are changing.
Keep reading to learn how firms outsourcing their work may change the financial industry, and what it may mean for you!
Investment Management Services Are Outsourcing More to Focus On Clients
A 2016 study found that 40 percent of investment management firms are outsourcing their work. That number is up from previous years, and it’s expected to keep rising. The same study found that 96 percent of firms that did outsource their work were satisfied with how the work was done.
The main reason firms are continuing to outsource their work is because it gives them more time to spend with clients. By spending more time with clients, firms are able to get a clearer sense for what they expect out of their money. They can decide if their money should include a lot of risks or not.
This means advisors can decide whether to be aggressive or conservative with clients’ portfolios.
By spending a lot of time with clients, firms also can focus on bettering their reputation. They can focus on getting more business by being a part of a community and learning about the people that walk into their offices. Not only does this help the company’s stature, but it also makes clients feel more secure with their money.
When the firm gets to know clients, then clients start to learn they can trust them. It makes clients willing to invest more of their money with the firm.
Outsourcing Doesn’t Just Stop At Financial Advisors
Investment firms are also using external companies to help them evaluate investment prospects. Rather than rely on external companies to invest client’s funds, they are doing it themselves. Instead, they make their decisions with information purchased from outsourced firms.
While this mostly affects careers in financial analysis, it also affects how financial advisors do their jobs. Instead of being able to help clients with in-house research, they’re instead relying on the information of other companies. They are trusting that the research was extensive and detailed.
Financial advisors also need to consider cultural differences when reviewing an analysis. Foreign countries may be less confident in tech companies, for example. If the research is purchased from a foreign country, advisors need to consider cultural differences when reviewing it.
Financial Advisor Education Is Working to Keep Up
As firms start to outsource the work of financial advisors, the curriculum to become a financial advisor is changing. While students still take investment classes, they take foreign language classes too. Business is international, so anyone in the financial industry should try to understand other cultures.
With a certain level of cultural sensitivity and worldly outlook, finance students can expect to succeed in the labor market. That’s why more finance curriculums are including communication, cultural, and humanity courses. Not only do they make you better suited for the job market, but they also help develop your sense of empathy.
And that is the most important trait of any financial advisor. They work with a wide array of people and need to know how to connect with them all. By learning about different cultures, advisors will seem more well-rounded.
As a result, they’ll seem more trustworthy.
Their Education Is Also Teaching Them To Care About Clients
As outsourcing financial advisor work becomes more common, there is also the concern that firms may focus on their assets. Instead of analyzing a person’s investments, firms may start trying to sell assets to make money. They may also seek to grow their own portfolios rather than analyze a client’s investments.
Education helps to make sure financial advisors focus on helping the people that come to them. It can be tempting to put a firm’s interests ahead of a client’s, but doing so just hurts everybody involved.
The firm’s reputation is damaged when it puts profits ahead of people, making it lose clients in the long run. Financial advisors also may find it hard to get work if they neglect a person’s finances to build their own assets. Finally, clients themselves may lose the money they were counting on to pay for their education, retirement, homes, or anything else.
The more firms outsource their work, the more likely they are to put profits ahead of people. Since firms may outsource the work done by financial advisors, those advisors may never meet clients in person. That makes it easier to dehumanize clients, which in turn makes it easier for firms to put profits ahead of people.
People Depend on Financial Advisors For Their Futures
Advisors are some of the most important people in their communities. Through them, people can work to afford a retirement, a home, or even just a future. An increase in the outsourcing of financial advisors is removing them from their communities.
It means investment management services are finding it easier to put themselves ahead of the people they’re meant to serve. And it also means that the demand for educated, empathetic financial advisors is increasing. Despite all this change, they’re still also some of the highest paid and staunchest members of the community.
If you care for your community’s financial health and are ready for a career change, use our education tool here. With it, you will be taking your first step towards becoming a financial advisor who works for people, not their firms.