By Cyril Tuohy
The future of financial advice lies not with accurate readings of the proverbial crystal ball, nor with nimbly stepping in and out of investment positions. And in no case does it lie with dumping a dictionary worth of investment and market jargon on a client.
No, the future of advice lies with the valuable exercise of communicating clearly and translating personal needs into a long-term strategy.
Jill Powers, managing partner with Trilogy Wealth Advisors in Bryan, Ohio, said that financial planners sometimes get so immersed in the vocabulary of the financial advisory world that they sometimes “talk over our clients.”
Understanding financial investments is important, “but if you can’t communicate with people in a way that they understand, it just isn’t going to amount to a good relationship,” Powers said.
Powers was one of four panelists who spoke at a recent webinar titled “The Future of Advice: Business Models and Services for the Next Generation.” The webinar discussed survey findings collected from 490 do-it-yourself investors and more than 500 advisors.
The panelists talked about how best to reach the next generation of investors.
Communication is always a top requirement when it comes to acquiring the skills necessary to become successful and effective advisors. But the explosion of information and the mountains of data available to anyone willing to sift through them have made life more complicated and daunting for many investors. Many feel overwhelmed, not unlike tourists visiting a huge museum that exhibits every painting and sculpture in its collection at the same time.
Investors will cut advisors some slack for using a little hyperbole in advisors’ marketing pamphlets or on an Internet home page. But when it comes to talking in terms that clients understand, using too much jargon will send investors scrambling for the exit.
Clients are busy — running a business, traveling for an employer, shuttling the children to after-school sports — and deciphering jargon-laden documents late at night isn’t what they are paying advisors for.
The ability to translate personal needs into an investment strategy was listed as the characteristic that investors most value in an advisor.
The survey found that 32.7 percent of investors 45 years old or older valued those translation abilities, and that 30 percent of investors under the age of 45 valued those translation abilities.
Translating what clients say into a long-term financial plan rated higher than issues often associated with advisors: shared values, integrity and trust, listening skills, responsiveness and communication skills, objectivity, years of experience, and an understanding of the current investment environments.
When looked at by gender, 36.8 percent of women and 29.2 percent of men said translating personal needs into a long-term strategy was the characteristic they valued the most in their advisors, the survey found.
Powers said that women struggle most with language used by highly technical advisors, but advisors who communicate through different channels — visual cues, clear and easy language, face-to-face conversations — are most likely to get through to their clients.
The media used to communicate are also changing as advisors spend more time talking to clients using video conferencing and Skype calls. With video conferencing on the rise, advisors should be preparing to use that communication channel, said moderator Marion Asnes, founder of the financial services consulting firm Idea Refinery.
A.J. Sohn, managing partner with Antaeus Wealth Advisors in Boxborough, Mass., said Antaeus advisors use Skype to communicate with clients when bad weather or other contingencies prevent advisors from seeing a client face-to-face.
Advisors need to learn to communicate clearly, and they need to pay some attention to how younger investors are migrating to other channels, because there will be no shortage of demand for their skills, according to projections from the Bureau of Labor Statistics.
Even with thousands of advisors retiring over the next decade, do-it-yourself investors aren’t flocking to roboadvisors, those automatic, Internet-based algorithms that have gained some traction in the market as a way to attract young, Internet-savvy investors.
Among the do-it-yourself investor group, 72 percent said they would consider working with a financial advisor, the survey found.
Women in particular are looking to advisors to provide a holistic approach to their retirement planning needs. In addition, advisors need to give investors — men and women — good reasons to invest with them, the survey found.
Advisors queried for the survey about future demand said the top five areas were retirement planning, investment management, estate planning, retirement saving and cash flow planning.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at email@example.com.
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