I’ve had the great fortune to work with advisors who are retired commercial or private pilots. These professionals are thoughtful, deliberate and unflappable in the face of challenge.
To some extent, pilots are both born and made. It takes a certain kind of person to accept the responsibility of operating a jet at 36,000 feet with hundreds of people on board. And it takes more than 1,000 hours in a simulator and with actual flying time before someone who is born with the right stuff develops the right stuff. Planes move fast, and bad things can happen. It is essential for the pilot to pay attention to what is possible and probable. So one skill that every pilot learns is to “stay ahead of the airplane.”
Seasoned pilots are prepared, calm and relaxed. They know how to allocate their mental energy to visualizing possible problems and solutions. Importantly, they don’t need to imagine everything that could go wrong—just the problems that are most probable. This small subset of issues must be considered and anticipated. A pilot also needs to integrate these imagined future challenges into the moment-by-moment operation of the aircraft. Even before the plane takes off, a good pilot is considering future problems. This is what it means to “stay ahead of the airplane.”
What Does This Have to Do with Being a Financial Advisor?
Client-facing financial advisors know that every client is the pilot of his own financial life. A client’s decisions—by omission or commission—have consequences. Advisors also know that most clients are overwhelmed by their daily lives and are focused on short-term problems, not long-term consequences. Pilots call this task saturation, which happens when so much claims our attention that we focus only on a few immediate challenges. In behavioral finance, this is called narrow framing.
Task saturation also affects financial advisors. How often are you so focused on daily concerns like portfolio dynamics, market fluctuations and managing your business that you can’t look at parts of the big picture, such as talking with clients about their long-term financial planning process? Clients and advisors alike can suffer from task saturation and be overwhelmed by short-term issues. While focusing on an immediate problem may be beneficial for a short time, there are inevitable consequences to ignoring the long term.
Pilots call this “getting behind the airplane.” Simulator training helps pilots see when this happens. After a simulation, the trainer points out when the pilot missed important information. The trainer asks, “What happened here?” The simulation and the trainer help the pilot realize when his attention slipped and he was no longer staying ahead of the airplane.
But there are no simulations for life. Client-facing advisors can assume that most clients are not trained or comfortable in the cockpit of their financial life. In many cases, task saturation affects their thinking. Observations of client behavior over 30 years have revealed that many clients have gotten behind the airplane: they want to talk about investment returns rather than wealth-management tactics. It is the financial advisor’s responsibility to get the client to stay ahead of the airplane.
How the Great Financial Advisor Becomes the Trainer
A great financial advisor knows that her first task is to understand the client’s long-term financial goals: where he is headed. This is necessary (though often overlooked) in order to understand the client’s current situation and the immediate tasks that must be executed.
The advisor’s second task is to discuss all of the client’s current financial issues in the context of his long-term goals. A standard of care of advice is a wonderful tool to help the advisor and the client agree on the immediate tasks that must be completed to get the client properly oriented. This almost always requires the advisor to educate and coach the client.
Ultimately, the most important task is for the advisor to alert her client about what he needs to do to stay ahead of the airplane. The advisor can use her standard of care as a checklist to point out what needs to be addressed immediately and what must be anticipated and planned. The advisor’s experience and well-designed standard of care helps clients make successful decisions.
Visit the AllianceBernstein Advisor Institute to request more information about designing a standard of care or to receive a copy of our wealth-management checklist.