Client satisfaction topping the charts: Cerulli

Financial advisers are largely giving clients what they need during these times of extreme market volatility and general uncertainty, according to the results of a new study from Cerulli Associates and the Securities Industry and Financial Markets Association.

The study, released this week, divided household financial assets into four broad categories, but focused primarily on households with assets between $100,000 and $1 million.

That segment was presented as the sweet spot for financial planning, representing 26% of all U.S. households and more than $11 trillion worth of total financial assets.

Of the 33 million households in the segment, the research found that 78% report using a financial adviser in some form.

Cerulli director Scott Smith confirmed that some of those adviser relationships could be as limited as an adviser servicing a company retirement plan.

Regardless, the survey found that 77% of investors believe their adviser is worth the cost, and 74% would recommend their adviser to someone else.

“Investor satisfaction is largely derived through an adviser’s ability to build strong client relationships,” Smith said. “Investors want to know they have a pair of safe hands to guide them through the good and the bad.”

At 26% of U.S. households, the $100,000 to $1 million segment is a distant second to the segment of households with less than $100,000 worth of financial assets, which makes up 67% of U.S. households and combines for $1.8 trillion in total assets.

The segment with $1 million to $5 million in household assets, represents 6% of U.S. households and combines for a total of $14.8 trillion.

On the extreme end, households with more than $5 million in assets make up 1% of U.S. households and combines for $20.8 trillion, according to the study.

The individual investor retail segment, where most financial advisers focus, is represented by more than 33 million households currently working with an adviser in some capacity.

With an average account balance of $135,000, but a combined total of $6.5 trillion with securities firms, the individual investor segment averages 1.5 adviser relationships per household.

On the subject of client satisfaction with their advisers, Smith said that is likely to only improve as the financial planning industry continues to move away from a focus on asset management and toward more holistic planning services.

“Our expectation is that financial planning services will increase as investments become commoditized and technology increases the importance of more personalized services,” he said. “Digital engagement allows for scaling of basic services, and more time for personal interaction, but automation is a complement to, not a replacement for, humans. Technology simply cannot replace the emotional aspects of wealth management.”

Along those lines, the study found that 66% of investors in the target segment said they prefer some human interaction when it comes to their investment portfolio.

That doesn’t mean advisers shouldn’t embrace available tools and technologies, rather it means clients don’t want to just communicate with an inanimate object when it comes to their financial assets.

“An adviser’s ability to provide a personalized approach built upon trust and dedication is critical to maintaining investor confidence,” Smith said.