The Vast Majority of Investors Report Satisfaction with Advisor Experience
June 25, 2020 — Boston
By measures of trustworthiness, dedicated relationships, and personalized advice, advisors are meeting investor standards according to the SIFMA-Cerulli Individual Investor research project
As financial advisors’ value propositions are put to the test through heightened levels of market volatility, new research issued by the Securities Industry and Financial Markets Association (SIFMA) and Cerulli Associates finds they are increasingly “worth the cost.” The SIFMA-Cerulli Individual Investor research project found over three-quarters of individual investors report using and relying heavily on a professional financial advisor for financial advice, especially as it relates to assuring a comfortable standard of living in retirement.
According to the research, 33 million U.S. households with between $100,000 and $1,000,000 in investable assets currently hold $6.5 trillion with securities firms, with an average relationship size of $135,000. In total, these investors account for more than 26% of the U.S. population and control over $11 trillion, or nearly 23% of investable assets in the U.S.
While 2020 has brought unforeseen challenges to advisors, investors are broadly satisfied with their advisor relationships. More than three-quarters (77%) of investors believe their advisor is worth the cost, while just 4% indicate their cost exceed the value they are receiving, an enviable ratio in any business relationship.
“Investor satisfaction is largely derived through an advisor’s ability to build strong client relationships,” says Scott Smith, director at Cerulli. “Investors want to know they have a pair of safe hands to guide them through the good and the bad. An advisor’s ability to provide a personalized approach built upon trust and dedication is critical to maintaining investor confidence.”
The ability to successfully navigate investors through periods of market stress will bode well for long-term asset growth. The study finds that 38% of individual investors believe they will need more advice in the future. To address this future need, advisors are broadening their financial planning services leveraging technology tools that enable personalization and scale.
“Our expectation is that financial planning services will increase as investments become commoditized and technology increases the importance of more personalized services,” says Smith. He urges advisors to balance high-tech with high-touch, citing the importance of human interaction. “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,” he concludes.
Note to editors
These findings and more are from The SIFMA-Cerulli Individual Investor research project.