Until this year, advisors have had it relatively easy — or at least easier. A decade-long bull market allowed them to loosen their ties and not spring from the chair each time the phone rang. Clients were generally happy and not overly demanding given that stocks pushed higher year after year. As long as their goals were being met, investors generally forgave advisors for underperforming a benchmark because the “numbers on the screen” were still green.
Then the pandemic struck, changing everything.
Suddenly, advisors had to scramble to more tangibly demonstrate value and justify their costs while calming jittery clients to ensure they are happy, or at least not plotting their exit while staring around the clock at their portfolios with bulging, blood-shot eyes.
While this narrative may sound familiar, a new survey is putting hard numbers next to the words.
AssetMark’s first American Financial Experience Survey states that since the pandemic began 62% of investors with advisors changed how they view their advisor’s performance. While 28% feel more positive about their advisor, 26% are “now questioning who they’re with” and 8% “are now unhappy with their advisor.”
[Like this article? Subscribe to RIA Intel’s’ twice-weekly newsletter.]
What’s the difference between happy clients and those unhappy or questioning their relationships?
“It speaks to which advisors could pivot and connect with clients,” Michael Kim, Chief Client Officer of AssetMark, told RIA Intel. Those that have embraced new technologies and virtual technology “are making a positive impression.”
Kim mentions, as an example, an advisor who sends birthday videos to clients. It’s “fun, personal” and effective. “He should be in Hollywood.” He also mentioned a Houston-based advisor who requires both spouses or involved parties to attend Zoom client meetings. “Travel is a non-issue.”
“The key takeaway is that there is incredible demand for education and awareness about how to invest,” said Kim, who notes that current uncertainty is driving this desire. “Advisors that can translate a complex topic into what it means for a client,” are particularly well positioned, he said.
AssetMark’s inaugural survey, which is aimed at “understanding the pulse of the investing public,” indicates that 46% of investors are seeking to learn more about investing. “We believe this demonstrates a tremendous opportunity for advisors to educate clients and prospects about the opportunities in investing, how to start, and the value advisors provide.”
Victor Ricciardi, Visiting Assistant Professor of Finance, Washington and Lee University, underscores the importance of frequent and frank client communication. That involves listening, he told RIA Intel.
“Advisors that are concerned about how clients perceive their overall performance should have honest and open conversations with their clients. Financial professionals that have proactive communications and demonstrate a genuine caring relationship with their clients are more likely to have happier clients. Remember to let your clients speak and express themselves, sometimes all they might need is an advisor that is a good listener in order to reduce the stress level of the client.”
One in four clients would leave their financial advisor due to lack of “personal connection,” according to an August study by AIG Life & Retirement and MIT AgeLab that surveyed more than 2,000 financial clients.
Younger clients and the wealthiest communicate most with their advisors. It reports that “30-45-year-olds and people with $250k+ in investible assets were in significantly more contact” with their financial planner.
The study noted that more than one-third of clients 30-to-45 years old say they view their ideal advisor as a life coach (40%) or friend (35%). Younger clients describe their financial advisor’s network (53%) and personality (48%) as key drivers of satisfaction.
And quirk can go far with younger clients. “Nearly 20% prefer the tone of the meeting to be humorous.”
Greg Bartalos (@gregorianchance) is editor of New York City-based RIA Intel.