Eight (Plus) Things Clients Want from Their Financial Advisors

Investment advisory clients are generally satisfied with their financial professionals, a new study found. But that feeling does not extend to all areas.

A 2016 advisory customer satisfaction study from J.D. Power, which focused on a wealth manager’s performance on three key issues – establishing personal financial goals, creating and managing a strategy to meet those goals, and tracking the progress of that financial goal-setting campaign -- showed that advisors underperformed in all three areas.

According to J.D. Power, 46 percent of survey respondents said their advisor failed to help them establish lifetime financial goals and to properly define the risk involved. Seventy-six percent said their advisor came up short on all three of the survey’s goals.

Financial services clients, especially younger, more affluent customers are especially skeptical of their advisor’s ability to deliver the goods.

A follow-up August 2017 study found that 48 percent of “emerging affluent investors” will “probably” or “definitely” walk away from their current wealth management firm, J.D. Power said.

That’s not surprising, as younger clients – the customers advisors need to sustain their practices – feel they have leverage, and have few qualms about exercising it.

"With the emergence of robo-advisors and self-directed platforms, investors have more options than ever, both within and outside the traditional full-service channel,” said Mike Foy, director of the wealth management practice at J.D. Power.

But investment advisors may have client-retention problems that transcend robotics platforms or indifferent millennials – problems that could really upend their practices if they’re not careful.

Wanting to be Heard

According to Natixis’ 2017 Survey of U.S. Individual Investors, when asked what they are looking for from their financial advisor, the most frequent response was “simply to be heard.”

The next priority was “doing a better job at aligning their investments with their personal values.”

Natixis also ranked additional priorities clients seek from their professional money manager:

1. Listen
2. Offer investments that reflect personal values
3. Provide a clear explanation of fees
4. Help discussing financial goals and planning with family members
5. Help with tax issues
6. Help manage market volatility
7. Talk about estate planning
8. Discuss charitable giving and philanthropic goals

“Investors receive a constant barrage of information, but what they really need is clarity,” said David Goodsell, executive director of Natixis’ durable portfolio construction research center. “Despite historically low volatility, investors still worry it will undermine their financial goals.”

After an eight-year bull market, investors still define risk as a loss of assets rather than missing out on opportunity, Goodsell added.

“Despite very high hopes for returns, they say they want safety over investment performance,” he said. “Investors clearly need a financial professional to help them reconcile these conflicts and achieve their goals.”

Another big client need is trust – they won’t go far in the business relationship without it.

“Clients want a sense that their advisor is completely trustworthy and only wants their best interests,” said Douglas Goldstein, a financial planner at Profile Investment Services in Jerusalem, Israel. “The client should be able to understand and follow what his advisor is telling him and feel comfortable to ask him any financial question that he wants.”

'Clients are Inundated'

Another big client priority is having a financial professional who can cut through the noise.

“More than ever, clients are inundated with financial information, from up-to-the-minute performance of their 401(k), to varying perspectives on Bitcoin’s effect on the economy,” said Kimberly Beck, vice president, advisor education programs at Envestnet. “Clients want advisors who can help them prioritize the most critical information, and tailor their financial plan accordingly – or help keep their emotions in check to keep their financial plans on track.”

An advisor-client relationship also won’t go far if there’s no transparency around fees and expenses, and their associated value.

“With the rise of robos, there is no doubt that clients are more conscious of fees,” Beck said. “However, fees generally come to the forefront in the absence of value. Advisors who are transparent about fees – and the value they provide for them - will earn the trust of their clients.”

Sure, it’s perfectly understandable for advisors to focus on tangible customer service issues, like fees and stock-picking prowess, but the fastest path to the exit is simple customer service.

“Consumers will always be looking for lower fees and additional services, but what clients really want most from their investment advisors is enhanced engagement,” said Chris Wong, chief executive officer of LifeSite in Mountain View, Calif. “People want advisors who are helpful and feel connected, on their terms.”

Brian O'Connell is a former Wall Street bond trader, and author of the best-selling books, The 401k Millionaire and CNBC's Guide to Creating Wealth. He's a regular contributor to major media business platforms. Brian may be contacted at [email protected].

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