What is the future of advice?

What constitutes a good advisor depends on what the client needs, in the same way a football player’s value depends on their ability to perform a role for the team. But as we salute some of the country’s best and brightest practitioners in our inaugural Top Advisors, some trends among clients are becoming more prominent.

In a recent study by Absolute Engagement in conjunction with the Investments & Wealth Institute, clients said the feeling of financial security, control over financial goals, and confidence in their ability to reach them are their three most important money concerns.  As it turns out, these are also the areas where they feel they aren’t getting enough help from advisors.

The industry has largely moved on from investment-centric presentations of advice to more human-centric, interactive experiences. In 2024, this is no great proclamation of originality, but it seems advisors aren’t yet fully seizing this opportunity.

The survey added that 43 percent of clients believe the greatest benefit of working with an advisor is in gaining clarity about the life they want in retirement. Alas, only half the respondents indicate that their advisor is helping them with nonfinancial goals such as health, fulfillment, quality time with family and friends, or travel.

Having a fulfilled life, or a life with meaning, taps into the theory put forward by Brian Portnoy of Shaping Wealth of “funded contentment.” Essentially, the theory says that being wealthy isn’t about stockpiling riches but about working out how your money fits into a meaningful life. An advisor’s ability to help a client achieve this is the future of advice.

Of course, this can require difficult conversations, and some people simply prefer investment advice – they’ve got the “life stuff” covered. However, the ongoing wealth transfer is shifting money, typically, first to mom and then to the kids. They want emotional intelligence, or EQ, not IQ, from their advisors, and they want their money to have meaning.

ELECTION YEAR IS HERE

You’re going to have to lock yourself in a log cabin in Wyoming to avoid this year’s presidential election, which nominally kicked off with Donald Trump’s win in the Iowa Republican primary. The rhetoric and name-calling will dominate headlines over the coming months, but the underlying uncertainty can spark market volatility and destabilize clients.

It’s an emotional time in which allegiances are challenged, divisions targeted. The risk is this filters through to a client’s financial decision-making.

When asked how the election will affect investment strategy, most professionals roll their eyes. It doesn’t, they say. It can affect people’s mood, though, especially if this campaign ups the ante on nasty, personal rhetoric, as seems likely.

The S&P 500’s performance in election year, on average, is fairly predictable: a choppy Q1 followed by a pickup as voting day nears, then a post-election relief rally when certainty returns.

That’s worth remembering when Biden and Trump start firing vitriolic verbal darts from their lecterns.