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From Fidelity Investments

Traits of the Valued Advisor

Dec 11, 2013 @ 12:01 am (Updated 1:16 pm) EST

Success in today's advice market generally demands a deep understanding of the end investor and dealing with a markedly different generation with distinct risk tolerances and technology needs. Yesterday's investor was more likely a Boomer focused on retirement with a traditional asset allocation mix and averse to using technology. He or she lets his or her advisor make the investment decisions and check in annually during a face-to-face meeting. Tomorrow's investor is more likely younger, uses traditional bank products, and embraces technology to visit his or her money and participate in the investment process.1 Advisors need to put themselves in the best position to prove their worth to the new investor. We call advisors who have proven their worth “Valued Advisors.”2 There can be many benefits for being considered a Valued Advisor, unfortunately, our data suggests that only 57% of investors classify their advisor as “Valued.”3 Potential Benefits of Being Considered a Valued Advisor In our 2012 Millionaire Outlook study, many Valued Advisors fostered a much stronger client relationship that was mutually beneficial for both parties. Investors surveyed who viewed their advisor favorably trusted their advisor to make decisions and expressed much stronger loyalty, indicating that their advisor was more important to them than the firm they worked for and that they would likely move with their advisor if they switched firms.

Compared to other advisors,
Valued Advisors had4:
  • Share of wallet* that was 22 percentage points higher
  • Three times the number of referrals
  • 5.5 versus 3.5 services used
Valued Advisor comparison chart Compared to other advisors, Valued Advisors:
  • Had more engaged and loyal clients. This translated into a higher number of services used and three times the number of referrals.
  • Managed more of their clients' investable assets. More clients looked to consolidate assets with them, and they had a higher share of wallet than other advisors.

Why Advisors Are Valued

Given that 43% of investors surveyed said their advisor did not prove their worth, there is an opportunity for advisors to examine, and potentially improve, their service offering to ensure they are meeting client needs. Investors who valued their advisors cited three key traits in our survey: Valued Advisors focused on the long term. Valued Advisors were focused on longer-term goals versus short-term fluctuations in the market. Accordingly, when asked to indicate the most important benefits of working with an advisor, those with a Valued Advisor said they: (1) help me reach my financial goals; (2) provide peace of mind; and (3) help me achieve financial independence. Valued Advisors provided comprehensive guidance. They focused more on holistic planning services, looked at their clients' total financial picture, and were more involved and personally connected with them. Investors with a Valued Advisor wanted their advisor to know everything about their personal and financial lives so they could help them plan accordingly. This may suggest that Valued Advisors have built trust with their clients and this information sharing may help further promote a personal connection and stronger relationship. My use of technology has enhanced my relationship with my financial advisor Valued Advisors used technology to their advantage Valued Advisors leveraged technology to enhance their client relationships. They were also more effective at using technology to foster a more collaborative relationship in a way that did not cannibalize their own services. Almost half of investors surveyed with a Valued Advisor agreed that they collaborate more effectively with their advisor through the use of technology. The impact of technology grew exponentially among Gen X/Y investors with a Valued Advisor, with 81% saying technology helped them collaborate more effectively.
To be a Valued Advisor
advisors may want to consider:
  • Focusing on the longer term
  • Providing more comprehensive financial planning and guidance
  • Using technology to enhance the relationship
Summary With Valued Advisors having a greater share of wallet*, a higher number of referrals, and clients consolidating assets with them, understanding the attitudes of investors who valued their advisors may point to opportunities for future growth. The definition of a Valued Advisor is evolving; it's no longer just about money management, but about providing peace of mind, getting to know the client personally and using technology to enhance the relationship, not replace it. Valued Advisors placed greater focus on long-term goals, more comprehensive planning services, and thoughtfully incorporating technology into their practice. Armed with a better understanding of the attitudes and preferences of these investors, advisors may be able to improve their approach to ensure they are positioning themselves for success. For more information, visit http://go.fidelity.com/insightsonadvice.
1 2012 Fidelity Millionaire Outlook, March 2012. 2 Ibid. Valued Advisors proved their worth to investors while navigating recent market conditions, which resulted in their clients seeing clear value in their service offering. 3 Ibid. 4 Ibid. As reported by the investors surveyed. * Share of wallet is the amount of investible assets an advisor manages for a client.