Communication Breakdown Between Advisors, Younger Clients Needs Careful Treatment, MFS Says

Monday, March 21, 2011 22:52
Communication Breakdown Between Advisors, Younger Clients Needs Careful Treatment, MFS Says

Tags: client communications | investor behavior

Advisors and clients should be on the same page when it comes to the markets to avoid misunderstandings, but according to new numbers from MFS, the cognitive gaps are still pretty big.

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Despite the rise of the retail investment media -- not to mention years of sometimes systematic client communication -- MFS found that advisors have yet to communicate their take on the markets in a way that sinks in with retail investors.


Most advisors like international stocks, for example, but this sentiment has only filtered out to 35% of the investors the mutual fund firm interviewed.


A lot of the discrepancies seem to originate in the advisors' wishful thinking or outright failure to really understand what's going on in their clients' heads. Most notably, 75% of the advisors thought investors have gotten more comfortable with risk over the last year, but only 15% of the investors actually feel that way.


The gap gets wider with younger investors. A full 84% of the advisors thought members of Generation X and Generation Y want to accumulate more wealth, and only 9% thought the real goal for this age group was wealth preservation.


In reality, these investors -- who tend to be younger than the average advisor -- are much more risk-averse, with only 39% still in accumulation mode despite their relative youth, and a full 22% looking to protect what they already have.


As surveys go, this one is almost actionable. Advisors can use it as a sort of "reality checklist" to make sure they're really talking to their clients, and not to some idealized version that isn't actually there.


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