Confidence is a critical component of success for financial advisors, as those who lack confidence about their knowledge and abilities will struggle to persuade clients to listen to their advice, or even to find and persuasively convince clients to hire them in the first place. But how do financial advisors develop more and better self-confidence to begin with? And is it really necessary to build self-confidence first in order to take action with clients… or is the reality that taking action and having some success is actually what it takes to best builds self-confidence at all? In other words, is it better to just try to go get clients and service them until you feel confident that you do it well? Or to first study and gain the knowledge necessary to feel confident enough to go get clients and service them instead?
In our 21st episode of Kitces & Carl, Michael Kitces and financial advisor communication expert Carl Richards explore these ideas as they talk about the results of a recent Twitter poll conducted by Carl, which posed the compelling question, “Which one of these is true for you? Having confidence leads to action; or taking action leads to confidence.” Surprisingly, respondents were equally divided, with 51% identifying themselves as “confidence first” individuals, and 49% as “action first” individuals.
Each of these ‘camps’ faces its own set of unique obstacles, where “confidence first” people must first study and invest in themselves but might then struggle with getting to a stage where they are ever comfortable taking action, as the hurdle for them is finding enough confidence to get going in the first place (in essence, having a very high “self-permission” threshold to ever take the leap and try). On the other hand, “action first” individuals have a lower permission threshold, realizing that they need to practice the action first using more of a trial-and-error approach, and perhaps even relying on ‘fake-it-‘til-you-make-it’ strategies before they can build the confidence they need to flourish… but might then struggle with undesirable outcomes arising from impulsive behavior, or at worst, undermine their confidence with the failures that result as impulsively gained clients turn around and fire them.
Furthermore, while it might be true that some individuals are hardwired with an affinity for either one side or the other, it’s also possible that some individuals may identify with both sides in a chicken-and-egg circular manner of thinking, where that person may not feel confident without taking some action and having some success, but cannot take that initial action without the upfront confidence that they can even do the action successfully!
Ultimately, the key point is that both paths to confidence work – whether a person needs to build confidence in order to take action, or if they need to take action in order to build confidence – and that both paths depend on individual style and arguably on one’s own self-granted permission threshold.
Regardless of which side a person may identify with (or even if they identify with both), though, a universal strategy to effectively develop confidence involves identifying the smallest doable next step that helps them on the path they are trying to follow (whether that be to take a particular action that will eventually lead to some level of confidence, or to figure out what it would take to build up confidence in the first place, which would facilitate carrying out some particular action), followed by a frequent reassessment of one’s situation to discover any new information or opportunities leading to a new smallest doable next step.