Advisor One recently offered an interesting glimpse into Research Magazine’s upcoming February issue.
This week, we’ll take a look at some of the topics covered and offer a few additional thoughts on the focus of the issue as well as tips for assimilating the unformation into your own practice.
Today, we'll look at the value advisors bring to their clients.
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Not surprisingly, contributing editor and Texas Tech University professor Michael Finke finds that the bulk of advisor value has to do with planning and relationships rather than investment performance.
Yet, as the IPI study showed us, investment returns are certainly a component of the criteria investors use for choosing advisors.
A recent Fidelity study showed that only 57% of clients felt their advisors provided value during the 2008 crisis. The ones who did provide value focused on helping clients achieve long-term goals and also offer more robust investment advice.
Money is a highly emotional and stressful topic and clients look to advisors to reduce the stress it places on their lives. Families of wealth often have complex situations that they look to advisors to simplify for them.
The value advisors offer from a performance perspective can vary widely from study to study.
One of the tasks of an advisor is to know an investor’s particular investment experiences and biases and to help educate against those. This enables investors to keep focused on the investment strategy and long-term goals set in early meetings together.
Another study showed that advisors who subscribe to a particular investment philosophy may lose clients when that philosophy is not in favor in the marketplace. For example, advisors focusing on value investing in the tech boom of the late 90s saw significant client attrition.
Another task of financial advisors is to help clients objectively quantify risks and relate those risks to the client’s particular tolerance for volatility.
Ultimately, however, estate planning, retirement planning, taxes, and insurance were the highest ranked forms of advice clients valued most
Studies can offer good insight to overall client trends. After looking at various studies and the different aspects of value cited, it might be a good exercise to survey your own clients to see how they value the services you provide them.