“While the industry has been focused on how to make this scalable advice model work for the very large mass affluent market—which is often not an ideal fit for full-service advisors—average satisfaction among this segment currently is lower than either full DIY investors or full-service investors,” the study said.
The promise of the hybrid DIY-advice model has not yet been widely realized, Foy said.
What can broker-dealers do to beef up brand loyalty and satisfaction among hybrid clients? “Provide flexible options on how they can receive advice and guidance, and then provide them help in deciding what model is best for them based on their current needs, preferences, interest level, and time,” Foy told Financial Advisor magazine.
“Should they work with an advisor, use digital or robo-advice, or be more self-directed? There are lots of options out there, but many investors don’t understand what’s best for them. For example, 81% of U.S. millennial DIY investors say they would be interested in digital or robo advice if they knew their firm offered it. This is a potential win-win for clients and firms as there’s more value being delivered and more potential for monetizing relationships,” he said.
As market volatility and losses persist, lack of brand loyalty and attrition are likely to get worse before they get better. “Over time we’ve seen that client satisfaction generally declines as market conditions worsen. This study was fielded in Q4 when markets were setting new highs, so things have already gotten more challenging,” Foy said.
For investors who remain completely self-directed, firms should develop and provide intuitive tools and educational content to help them “develop confidence and make better decisions about investing in light of their overall financial circumstances and well-being,” he said.
“Investing isn’t something clients can or should do in isolation from broader concerns about things like debt and budgeting,” Foy added.