There is a mega-trend happening in the advisory space, and judging from the responses to joint research from the Money Management Institute (MMI) and Aon, advisors do not seem to be catching on as quickly as they should.

That mega-trend, explains Craig Pfeiffer, president, and CEO of MMI, is around engaging holistically based on a financial plan that integrates value. “Clients want to talk about their values, and they want to integrate their values into their financial decisions, and advisors want to do so in the old context,” he said.

The traditional advisors’ role has been focused on portfolio construction and portfolio management, but investors’ lives have become more complicated and more sophisticated, Pfeiffer said. “At a high level, it’s really about advisors becoming relationship managers from being portfolio managers."

The report, "Harnessing Generational Differences Across the Financial Planning Process," is the second release in a four-part MMI and Aon research endeavor titled, "The Advisory Solutions: Expectations and Experiences." It examines gaps between investor perceptions and firms' delivery that continue to challenge the wealth management industry and inhibit client value. The recent survey, which was conducted between December 2019 and January, included 1,500 wealthy individuals and mass-affluent investors with more than $250,000 in investible assets, as well as 1,077 financial advisors across the U.S.

One of the more glaring gaps revealed in the research was advisors’ perception of clients’ satisfaction. Most investors (77%) indicated they wanted their advisors to ensure that their investment strategy is aligned with personal values, while only 44% advisors believed their clients do. The gap was more visible for younger investors—defined in the research as those under 45 —of whom 91% seek alignment with their personal values and investment strategy.

Not surprisingly, the research found that satisfaction scores are higher for those who do discuss personal values with their financial advisor and have those values reflected in their investments. For financial planning, the score is 75% versus 57% for those who do not have that discussion with their advisor; and for overall relationship, the score is 78% versus 66%.

Young investors, as pointed out by David Lo, assistant partner and head of U.S. Client Insight at Aon, are particularly not satisfied with the overall financial planning experience with their advisors. “There is a disconnect there that we see in the data," he said. "Certainly, you can attribute some of that to the desire to talk about their values and the lack thereof that we have seen to date.” 

Based on Part 1 of the MMI and Aon research, younger clients placed greater importance on social and environmental causes such as human rights (49%), diversity and inclusion (23%) and corporate governance (15%). Older clients appeared more patriotic (49%) and religious (32%).

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