Report

U.S. Retail Investor Advice Relationships 2021

Navigating Perpetual Unease

Differentiate in a Commoditized Environment

  • Address the planning impacts of pandemic recovery
  • Reduce the impact of behavioral biases
  • Understand portfolio durability during periods of crisis

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Report Retail Investor Advice 2020 Detail

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Drew O'Hearn, CFP

Drew O'Hearn, CFP

Director, Account Management

Summary

Explore affluent investors’ relationships with their financial advice providers. Understand investors’ criteria for selecting advisors and their preferences regarding ongoing communication, including the use of digital tools to augment traditional advisors. Fine-tune your value proposition to best address specific market segments.

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A Note from the Author

Investor Satisfaction Hits an All-Time High

Scott Smith

Scott Smith

Director

Bio →

Scott Smith

Scott Smith

Director

With more than 20 years of financial services industry experience, Scott leads Cerulli’s research efforts focused on investor behavior and advisory relationships. In his time at Cerulli, he has authored more than two dozen in-depth reports on topics ranging from wholesale distribution to digital advice platforms. His research helps Cerulli’s clients understand how to optimize their platforms given the evolving demand for financial advice.

Scott started his career wearing a headset at Putnam Investments’ service center in 1996, before moving to more strategic roles at MFS Investment Management starting in 2000, and then to Cerulli in 2007. In addition, he currently serves as member of the CFP Board’s Digital Advice Working Group, and as a judge for the wealthmanagement.com Industry Awards.

Full biography here.

Over the last 12 years, investor satisfaction with the quality of financial advice received has skyrocketed from 41% in 2009 to 81% as of 2Q 2021. While this bodes well for existing traditional advice models, advisors must broaden the scope of their guidance and update their offerings to match evolving investor preferences to minimize the threat of client defection and optimize new client acquisition.

What can advisors do to retain this sentiment?

Employ behavioral finance techniques: According to our research, increased attention to clients’ emotional biases through the lens of behavioral finance can be an impactful tool in helping set goals, maintain investment discipline, and reduce decision fatigue.

Leverage collaboration tools, including financial planning: 55% of investors find it important to have a written financial plan, up from 38% in 2009. Advisors with effective collaboration tools can use this as an opportunity to increase their engagement levels with current and prospective clients.

Understand engagement preferences: Investors’ willingness to consider adopting an online-only financial advice relationship has not grown substantially from 2017 (43%) through 2Q 2021 (45%). Though digital advice will likely remain an important initial option for younger, less affluent investors, these emerging investors will likely want access to an individual advisor as their needs evolve.

These findings, along with a complete sizing of the retail investor market in the U.S., can be viewed in depth in Cerulli’s latest report, U.S. Retail Investor Advice Relationships 2021: Navigating Perpetual Unease.

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