Advisors may need to re-tweak their service to really appease high-net-worth investors
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Advisors may know their business very well, but that doesn’t mean they know what wealthy clients expect from them.
That’s the key takeaway from a recent joint study done by Scorpio and the CFA Institute, according to Investor’s Business Daily. While the study found some points of agreement between the two groups – they were close in terms of rating the importance of professionalism, transparency, and resolving conflicts through mediation – they differed in other areas.
For example, 93% of advisors surveyed prized clear communication as a key to success, but just 53% of clients echoed the sentiment. Similarly, 86% of advisors valued integrity, while only 60% of rich clients felt the same.
There’s also a gap between clients and advisors when it comes to the importance of financial acumen: 71% of advisors thought that it’s an essential trait, but only 51% of clients thought that way. “Many advisors … are investment focused. That's good, but limiting,” Bob Dannhauser, head of global private wealth management for the CFA Institute, told Investor’s Business Daily. “It does not necessarily address the full spectrum of client needs.”
According to Dannhauser, advisors have to be prepared to serve clients in at least three other ways. They should be able to work with specialists in niches such as philanthropic strategy, estate planning, and tax preparation; help clients recognize their own biases to avoid investment risks; and help them remember markets’ long-term historical behaviour, not just its recent performance.
The survey also found that advisors tended to emphasize transparency and fee competitiveness (62%) and alignment of personality with financial goals (62%) as drivers of client loyalty. On the other hand, only 41% of high-net-worth or affluent clients valued transparency and fee competitiveness, and just 37% of them thought of the alignment of personality with financial goals as significant.
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That’s the key takeaway from a recent joint study done by Scorpio and the CFA Institute, according to Investor’s Business Daily. While the study found some points of agreement between the two groups – they were close in terms of rating the importance of professionalism, transparency, and resolving conflicts through mediation – they differed in other areas.
For example, 93% of advisors surveyed prized clear communication as a key to success, but just 53% of clients echoed the sentiment. Similarly, 86% of advisors valued integrity, while only 60% of rich clients felt the same.
There’s also a gap between clients and advisors when it comes to the importance of financial acumen: 71% of advisors thought that it’s an essential trait, but only 51% of clients thought that way. “Many advisors … are investment focused. That's good, but limiting,” Bob Dannhauser, head of global private wealth management for the CFA Institute, told Investor’s Business Daily. “It does not necessarily address the full spectrum of client needs.”
According to Dannhauser, advisors have to be prepared to serve clients in at least three other ways. They should be able to work with specialists in niches such as philanthropic strategy, estate planning, and tax preparation; help clients recognize their own biases to avoid investment risks; and help them remember markets’ long-term historical behaviour, not just its recent performance.
The survey also found that advisors tended to emphasize transparency and fee competitiveness (62%) and alignment of personality with financial goals (62%) as drivers of client loyalty. On the other hand, only 41% of high-net-worth or affluent clients valued transparency and fee competitiveness, and just 37% of them thought of the alignment of personality with financial goals as significant.
Related stories:
Are you doing enough to help business owning clients?
When it comes to CFP designations, fit could be more critical than pedigree
