Shut up and take our money, investors say about financial advice

There's some good news for CFPs in a report this week from Cerulli and SIFMA – more than ever, people want to hire them.

It’s significant that most affluent households are now willing to pay for financial advice, with 63% saying they would do so, up from just 38% as recently as 2009. Along with that, the portion of people saying they are getting the financial advice they need has nearly doubled, going from 41% to 78% over the same period.

Additionally, “recent market volatility has had minimal impact on demand or retention – investor satisfaction with advisors and providers remains near all-time highs, with 81% of investors expressing satisfaction with their advisor and provider,” Cerulli said in an announcement of its findings.

The findings come from the MarketCast Global Wealth Monitor Survey, which includes responses from 11,000 households, including affluent investors (more than $250,000 in assets) and near-affluent investors (income over $125,000).

Another key point in the report is that the DIY investor market appears to be eroding. People who identified as self-directed investors represented 24% of responses, down from 41% in 2009, though much of the change has happened since 2019, when 35% said they were self-directed. Meanwhile, the households indicating their assets are professionally advised went from 35% to 47%, according to Cerulli and Sifma.

Despite the proliferation of online advice services, people’s preference for such services has held more or less steady over the past few years. While most people under 50 said they are comfortable with online-only services, that was true for only 28% of people 60 to 69 and 21% of those 70 and up. Across age groups, 43% said they were open to digital advice – the same figure seen in 2017.

The most appealing aspects of a traditional wealth management firm are having a full range of investment options, having a dedicated advisor, and the use of active management, according to the survey results. Conversely, the biggest negatives about such firms are high fees, high account minimums and a lack of transparency about fiduciary duty, investors said.

Further, people tend to get attached to advice providers – they are reluctant to search for or hire new ones, according to the report. That makes it necessary for advisors to make good impressions with prospects who are younger than 50, Cerulli noted.

“Displacing providers will become increasingly difficult as incumbents find more ways to extend the breadth of their client relationships,” Scott Smith, director at the firm, said in a summary of the findings. “The more advised clients feel that someone is looking out for them early on, the harder it will be to break the trust and loyalty that comes with the advice relationship.”