This increase in demand has put more pressure on advisors to scale their business in order to offer broader services to more clients, Cerulli said, without losing focus on the key attributes that constitute client satisfaction: trustworthiness, quality of advice and quality of service.
Across all age groups, the vast majority of investors who work with an advisor are extremely or very confident in their ability to make good investment decisions specifically because they work with an advisor, the report found. The lowest confidence was seen among clients 50 to 59.
“Investors in their 50s are least likely to report confidence as their prospective retirement quickly approaches, creating a litany of questions for them to consider,” the report stated. “Providers and advisors play an important role in helping these investors address their most pressing concerns and develop attainable strategies to maintain progress towards their goals.”
For advisor-reliant and advice-seeking clients, the two most important categories of investor for financial advisors, the popularity of a comprehensive review of the investment portfolio on a period basis is high, with 55% of advice-seeking clients and 71% of advisor-reliant clients calling this service extremely important in choosing an advisor, the report said.
And while clients remain concerned about cost, advice seekers and the advisor reliant report the value they receive from their financial advisor is worth the expense. Some 93% of advice seekers and 86% of the advisor reliant said this was the case, while only 4% of all investors indicated the cost was greater than the value of the advisory relationship.
More good news for advisors comes in the form of client loyalty, as it will get increasingly more difficult for clients to switch advisors as advisors find more ways to extend their services. However, that does require advisors look downstream for growth and attract clients before they meet typical wealth thresholds.
“To engage the advice seeker segment, it is crucial for providers to engage with prospects under age 50 as by this point investors have largely chosen their long-term providers or have chosen to take on the responsibility themselves. Providing true advice, rather than guidance, to investors in younger age cohorts will become increasingly important,” the report stated. “A strategy based on waiting for prospective clients to attain significant wealth before initiating relationships will face diminishing returns as more providers take on the challenge of early engagement through recordkeeping or other emerging wealth opportunities.”
Cerulli stated that while the industry is migrating toward a “fee-based future,” that often means asset-based fees. However, advisors should also consider hourly fee options to accommodate emerging relationships while these clients’ portfolios size up to asset-based levels.
Not surprisingly, personalization continues to be a key feature of the advisor relationship, as clients are keen to minimize taxes any way they can. About 77% of advice seekers and 73% of the advisor-reliant said minimizing their tax bill through tax-efficient investment strategies would be the number one feature they’d seek when opening a new financial account.