Bridging the Wall St – Main St gap

Unless you’ve totally ignored the news for the past decade (and really, who could blame you?) you know that Americans… aren’t so crazy about Wall Street.

In a 2019 survey, 45 percent of Americans said investment firms and Wall Street made it harder to achieve the American dream. This gets at two main problems I want to talk about… because I think financial advisors, particularly RIAs and CFPs, are perfectly positioned to solve them.

The biggest problem is, of course, that Americans don’t trust financial firms. Even a decade after the financial crisis, Wall Street is the enemy. But part of that might be tied to what I see as the second problem. The “myth” of Wall Street.

 In actuality, the financial world is complex. There’s a big difference between a consumer bank and an investment bank, venture capital and private equity, broker-dealers and RIAs, and so on. But to the average consumer, these lines are very blurry at best and nonexistent at worse.

 That means almost anything “finance-y” tends to get lumped into the same category as Wall Street… and takes on the negative associations that come with it. Advisors are no exception. Which is why it’s critically important to reframe the conversation and make it clear how advisors fit into the world of Wall Street… and Main Street.

Be a general contractor

If you don’t know anything about home repair, you might be nervous to go into Home Depot. You have no idea if people are going to sell you things you don’t need, you’re not sure whether you’re overpaying, and you don’t even know what that thingy does.

Now imagine going to Home Depot with a fee-only contractor.  He guides you through the process, walks you through what you do and don’t need, and tells you what that thingy does and why.

You probably feel a lot more confident about future trips to Home Depot, and you probably feel really good about your decision to work with a contractor.

Financial advisors need to be this contractor, but for money. They need to start decoding Wall Street (Home Depot) using financial education, and they need to be really clear about how they fit into the mix.

Because let’s be honest, when you say the term “financial advisor” people are going to assume that you work for Home Depot. So advisors need to be really clear about how they’re paid.

To the broker-dealer investment professionals, this is my plea to you: please make it clear that you work for Home Depot. People know that employees are still a great resource and source of advice, and that transparency goes a long way for the industry as a whole.

RIAs, on the other hand, may have to go out of their way to make it clear that they don’t work for Home Depot, or Wall Street. You may need to take extra steps to explain that while you work with wall street, you’re actually a small business owner.

Advisors overall may need to do more to emphasize their connection to Main Street, clients and real people. The Wall Street connection is clear, but your unique ability to bridge the divide between “real America” and the “all of those money things I don’t understand” may not be.

Focus on people, not portfolios

It can be tempting to focus on wealth building when talking to clients, since that’s often the ultimate goal. But some of the associated words, like return, yield, diversification — even investment — might trigger a “Wall Street” vibe. And while it can be tempting to associate yourself with Wall Street’s all-time highs, or use the lingo you worked so hard to learn, it might be backfiring in unexpected ways.

An interesting experiment might be to market yourself in a way that emphasizes your Main Street. Try with a few clients or potential clients to emphasize your power to bridge the gap and use education to help decode Wall Street. See how clients respond to having a “guide to Wall Street” — it just might win you more business and more client trust.

My hypothesis is that solving this second problem — breaking out the different types of financial firms so not everything in the financial world gets lumped in with Wall Street — will go a long way toward solving the first problem of building trust.

This is one way to help Americans get comfortable with advisors. And hopefully, it’s also a step toward getting people comfortable with investing, money and building wealth.