Hear What Investors are Thinking

2020 Advisor Report Card: It’s Been A Rough Year, But Advisors Have Shined

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Jeanie Ulicny

Surveys Show Clients Are Happy with Their Chosen Financial Advisors Overall

By Jeanie Ulicny

As investors finally close out a year that seems a decade long, at least one bright spot got a little brighter. Industry surveys from Cerulli, iCapitalNetwork, Broadridge and Nationwide show that where clients are concerned, investment professionals scored some high marks in 2020. 

While financial advisors reached high levels of achievement in selected areas, they performed “above average” elsewhere – and had one significant “area for improvement,” too. For this year-end Advisor Report Card, we examine five critical drivers: 

  1. Overall Client Satisfaction
  2. Investment Diversification
  3. Client Communications
  4. Attracting First-Time Investors
  5. Extending Family Discussions

Here’s what we found.

Overall Client Satisfaction: Excellent

An overwhelming 80 percent of investors said they’re satisfied with their current advisor, according to a recent survey from research firm Cerulli Associates. In particular, investors cited high satisfaction with “the transparency, honesty and dependability of advisors,” according to the report. 

“By keeping clients abreast of market developments, while also lending a crucial empathetic ear, advisors reinforce their importance to clients and the value inherent in personalized advice relationships.” Moreover, 82% of investors working with an advisor believe the services they get from an advisor are worth the price.

COVID-19 has also extended the client service reach of financial professionals beyond traditional financial concerns. According to a recent study conducted by Ulicny Financial Communications and 8 Acre Perspective, 60 percent of advisors said they are spending “more time with clients on non-investment-related financial issues,” while 84 percent said developing their clients’ financial literacy has become more important and 51 percent said they have been fielding more questions “about healthcare and estate planning.” 

Investors cited high satisfaction with “the transparency, honesty and dependability of advisors.”
Cerulli Associates

Investment Diversification: Above Average

Following the financial crisis of 2008, investors enjoyed a decade-plus bull market that saw equities return more than 300%. “Today, however, pandemic-fueled volatility and a very uncertain market outlook have many advisors and clients seeking a steadier ride as well as diversified sources of return,” according to a report from iCapitalNetwork. 

“Adding a 20% private equity allocation to a traditional 60%/40% stock/bond portfolio may enhance return potential while mitigating risk,” the report continued, noting that 69 percent of advisors “see opportunity in the current environment and are reshuffling portfolios with a goal of improving client outcomes.”

Most investors appear to be under-diversified and overdue for a portfolio rebalancing as well, according to the consumer version of our study with 8 Acre Perspective. “Seventy-five percent of investors reported their financial situation is as good as or better than before COVID-19,” the report stated. Yet, “more than seven in 10 have not made changes to their portfolios.” 

Interested in the full Ulicny/8 Acre study on the impact of COVID-19 on consumers and advisors? Click here for more details.

Client Communications: Excellent

A whopping 79 percent of investors reported more frequent communications with their advisor since March when stay-at-home mandates were first issued, according to a Broadridge survey of 1,000 North American investors. 

When asked what communications they most needed from their advisors, respondents agreed that after a comprehensive view of their accounts, they wanted tips on saving money, new investment ideas and a personalized analysis of their investing habits. 

And investors aren’t looking back: “We are seeing an accelerated adoption of digitalization and personalization from investors, financial advisors and wealth firms as a result of the pandemic,” the report continued. “As a result, investors don’t want a return to the past. They largely prefer this new normal.”

“We are seeing an accelerated adoption of digitalization and personalization from investors, financial advisors and wealth firms as a result of the pandemic.”
Broadridge

While clients are making their desire for more communications more clear, advisors are following suit. A full 97 percent of advisors say they want more marketing resources from their financial providers, and 28 percent say they need more client-facing communications.

Attracting First-Time Investors: Above Average

COVID is motivating legions of investors to think twice before “doing-it-themselves.” As a Nationwide survey pointed out last summer, one in four Americans polled said they sought the help of an advisor for the first time ever. That includes 26 percent of investors with at least $100,000 in investable assets, as well as 24% of all respondents who participated in the survey. 

“Even if they do all the right things to manage their finances and investments, the vast majority of Americans agree they can still be blindsided by outside events,” the report added.

Advisors topped the list of trusted sources for general financial and money management advice during the pandemic, followed by friends and family as well as online portfolio tools.

“One in four Americans polled said they sought the help of an advisor for the first time ever”
Nationwide

Extending Family Discussions: Needs to Improve

Every report card has room for growth, so why would an advisor report card be any different?

A startling 44 percent of investors when asked to complete the statement, “My financial advisor has communicated with my (children, grandchildren, heir or spouse)” answered, “None of the above,” in the Broadridge investor survey. 

Advisors may be missing out on building key family relationships with the millennials in the house just as some $68 trillion is set to transfer to next-gen investors by 2030. 

The report continues: “With clients spending more time at home due to the pandemic, advisors have a once-in-a-lifetime opportunity to develop a deeper relationship with their client’s entire family. It doesn’t have to be more complicated than a video conference. This is a natural moment to engage, educate and communicate with spouses, partners and children.”

From diversification and client service to communications and attracting first-time investors, financial advisors had a good year. Despite all the Zoom calls and social distancing, financial advisors generally met and exceeded client expectations throughout 2020’s historic challenges. 

Today’s adaptive financial pros are finding that the environment still holds many opportunities to pursue the new clients they want while they expand the relationships they have.

A startling 44% of investors, when asked to complete the statement, “My financial advisor has communicated with my (children, grandchildren, heir or spouse)” answered, “None of the above,” in the Broadridge investor survey.

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