For the past two years, at times it has felt like every time we turn on the news, the worlds in which we live–professionally and personally, get upended. As financial advisors, it’s critical that we acknowledge what our clients are hearing on the news, walk alongside them, and help them see through a variety of perspectives. In fact, a recent survey conducted by Edward Jones with Morning Consult shows investors’ needs from their financial advisors are changing. More than half of Americans point to a variety of factors, including Covid-19, interest rates and the unemployment rate, as impacting their expectations for their financial advisor. This figure increases to three-quarters of millennials working with financial advisors.
Below are three of the key factors driving investors’ shifting expectations and steps advisors can take to meet clients’ needs in the current environment.
Disruptive Economic Conditions
Investors have certainly been faced with disruptive economic conditions over the past year, and that can make it tempting to reconsider investment decisions and make emotional changes that can severely impact financial health. An overly negative view of the economic outlook can result in an emotional sell off of solid investments while an overly optimistic view can result in more risky investment buying. Either action can have a negative impact on an investor’s financial goals.
During times of market volatility, financial advisors should be particularly proactive in communicating with clients who may be more nervous and prone to emotional decision making. Remind them of the long-term strategy you have in place to achieve their goals and why that shouldn’t be swayed by short-term market gyrations.
Shifting Millennial Priorities
As we engage with the next generation of clients, millennials are becoming more involved in their financial preparation than their parents and grandparents. Some are also delaying having children, choosing not to have children and/or opting not to own homes more than previous generations.
When working with younger clients, it’s critical to gauge their desired level of involvement in the process and understand their goals, so you can personalize their strategy and communicate accordingly. With more information at our fingertips than ever before, ensure they are evaluating and thinking critically about the sources of their financial advice.
Economic Illiteracy
Financial literacy is another factor contributing to changing investor expectations. According to our survey, there is a gap in economic and financial knowledge, leaving nearly a third of Americans feeling less than confident in their economic literacy. Trusted financial advisors can play a key role in building financial knowledge and confidence—two important building blocks for financial resilience.
Many emotions impact financial decisions including stress, anxiety, frustration, concern, disappointment and excitement. Those who work with a financial advisor tend to find comfort in their financial advisor’s knowledge and experience—helping them feel more informed and less stressed and frustrated about their finances.
As financial advisors, we believe we have a responsibility to serve our clients in a complete way, educate them on how the market works, and reassure them that continuing to follow a well-thought-out strategy is one of the best ways to help weather the storm. We know how important it is to not let fear or anxiety about market volatility, or eagerness to invest, derail long-term goals. That’s why at times like these, it’s that much more important for investors to have a financial advisor to help them stay focused on financial outcomes based on their long-term goals.
Ken Cella is principal of branch development at Edward Jones.