Most Investors Are Satisfied with Advisor Experience

While 2020 brought unforeseen challenges, investors are broadly satisfied with their advisor relationships.

By Ayo Mseka

By measures of trustworthiness, dedicated relationships and personalized advice, advisors are meeting investor standards. This is according to the SIFMA-Cerulli Individual Investor research project. The SIFMA-commissioned research, Individual Investors’ Use of Financial Advisors conducted by Cerulli Associates, explores the relationship between individual investors, defined as households with $100,000 to $1 million of investable assets, and their financial advisors.

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 ensuring a comfortable standard of living in retirement.

According to the research, 33 million U.S. households with between $100,000 and $1 million 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, the survey notes.

More than three-quarters (77%) of investors believe their advisor is worth the cost, while just 4% indicate their cost exceeds the value they are receiving. This is an enviable ratio in any business relationship, according to the survey.

“Investor satisfaction is largely derived through an advisor’s ability to build strong client relationships,” said 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.

Serving More Investors

To address this future need, advisors are broadening their financial planning services and 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,” Smith said.

He urges advisors to balance high-tech with hightouch, 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 concluded.

Helping Clients Secure A Sound Financial Future

Here are some of the ways in which advisors help individual investors, according to the survey:

• ”We help investors identify, prioritize and pursue financial goals. Clients don’t know where to start — we do.”

• “We help prepare them for what might go wrong.”

• “Our goal is to demystify and simplify the path to clients’ financial goals.”

• “We ask clients, ‘What are you doing to be ready for tomorrow?’ Then, we provide human-centered complete wealth management.”

• “We navigate challenging times for clients and help them feel understood.”

• “We help investors balance today and the future.”

• We are “super focused on making sure that we get tech right.”

• “We can’t replace that human centered connection, but it [technology] can be a bridge for an advisor to have a deeper relationship.”