'Advice' is changing due to client awareness of fees

Cerulli study says advisers have to pay attention to other aspects of client engagement

Apr 4, 2019 @ 1:52 pm

By InvestmentNews

Three-quarters of advisers in a new Cerulli Associates study agree or strongly agree that, compared with five years ago, prospective clients are now more sensitive about fee levels.

As of last year's second quarter, 53% of investors agree that they are willing to pay for advice regarding their financial investments, representing a 15-percentage-point increase from 2009, when only 38% of investors expressed such willingness.

(More: Advisory fees push commissions further into the background)

The percentage of investors who believe that their advice is either free or are unsure how they pay for advice has fallen from 65% in 2011 to 42% in 2018, Cerulli said in a release.

"While clients understand that advice comes at a cost and many believe it is worth its expense, if the cost-benefit of engaging with an adviser is not clear, they are more likely to opt for other providers," said Marina Shtyrkov, a research analyst at the Boston-based firm.

"Although acumen and investment performance are valuable, practices that emphasize only these elements may be misaligned with the true drivers of investor satisfaction," Ms. Shtyrkov said.

(More:Time: An asset to be invested, not spent)

According to the majority of retail investors, transparency (73%), understanding of needs and goals (67%), and promptness of requested follow-ups (66%) are paramount to advisory relationship satisfaction.

But of advisers surveyed, only 30% strongly agree that their practice goes above and beyond to make clients feel special, and that it has a repeatable, consistent client experience.

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