Trust, not fees, now drives how investors choose an advisor

Financial advisors competing primarily on cost may be fighting the wrong battle.

That's according to new research from TransUnion, which finds that trust and reputation now outweigh fees as the leading factor investors use to select and stick with a wealth management provider – a shift that carries direct implications for how advisors structure client communication and prospecting strategy going forward.

The Chicago-based credit reporting and analytics firm surveyed 1,000 U.S. consumers holding at least $20,000 in investable assets. Nearly two-thirds, 65%, of current investors ranked trust and reputation among their top considerations, compared with 49% who cited fees and pricing. Among prospective investors shopping for a provider, 58% put trust and reputation at the top of the list.

Transparency emerged as the clearest driver of that trust. Investors pointed to clear communication about fees and advice, along with brand credibility, as the two leading factors shaping whether they consider a firm trustworthy, each cited by 56% of respondents.

Read more: Fight against investor fee confusion far from over, says Dalbar

Fraud protection was also a priority. Just over half, 56%, of investors said they are moderately to extremely concerned about how fraud could affect their investments, a signal that firms slow to invest in identity and account security may struggle to retain skittish clients.

“Wealth managers have traditionally competed on performance, products and price," said Joshua Turnbull, senior vice president of financial services at TransUnion. "Investors are telling us that confidence and credibility matter as much as – and sometimes more than – traditional decision factors."

The TransUnion findings build on a pattern flagged in a recent Gallup study conducted with Edward Jones. That research, published earlier this month, found 32% of American guidance-seekers turned to a professional financial advisor in the past year, well behind the 73% who relied on their own internet research. Yet advisors topped every other source, including AI tools and family members, when Gallup asked adults how much confidence they had in each source's financial expertise: 79% of Americans expressed at least some confidence in advisors' expertise, more than double the share who said the same of AI tools.

Other sources of financial guidance covered in the Gallup/Edward Jones research included finance professors, who earned at least some confidence from 64% of survey respondents; relatives and family members (62%); and friends or colleagues (just over 50%).

The benefits of having a trusted source of financial guidance go beyond investment returns. Gallup found financially fulfilled adults, those whose finances support the life they want to live, were far more likely to work with an advisor than financially stressed adults, at 60% versus 14%. Meanwhile, younger, less-fulfilled investors leaned instead on family, friends and AI.

Read more: Wealth does not necessarily mean financial fulfillment, which most Americans say they lack

For TransUnion, trust is a long game. Aside from earning trust throughout the client's investment life cycle, it said wealth firms should strengthen engagement, communication, and protection strategies across relationships, while helping protect investors from fraud and identity-based threats.

“Trust has become a defining factor in how investors choose and evaluate wealth management providers," Turnbull said. "For firms navigating a rapidly evolving marketplace, understanding what builds confidence is critical."