Why Do Clients Think Advisers Are Valuable?
Investors value advisers who attend to their financial and human needs.
In the past, I’ve likened a client’s view of a financial adviser to watching a duck swim across a pond. To the observer, it looks like the duck is effortlessly gliding across the water, but beneath the surface, the duck is rapidly kicking its webbed feet.
Similarly, an adviser is frequently hard at work doing things their clients will never witness. Unlike a duck, though, advisers face the additional difficulty of needing to demonstrate their value to their clients while much of the work that contributes to their value isn’t apparent to clients. This can lead to a mismatch between what clients think about an adviser’s work and what an adviser thinks. Therefore, advisers must understand what clients think an adviser’s value is so they can better highlight that value.
In our new report, we examined how investors value different capabilities of advisers. To uncover a holistic understanding of what investors think, we synthesise findings from three different measurements (ranking, willingness to pay, and open text) across four studies. Using different measurements allowed us to discover major themes in what investors value in an adviser, to help advisers better respond to them.
4 Main Things Investors Value in Advisers
Based on converging evidence across the four studies, we identified four major themes that reflect what investors are looking for in their advisers:
- “Advice I can rely on.” Across all four studies, we found investors were looking for personalised financial advice that brings them comfort. Finances are a big cause of worry, and people often don’t feel they can handle their finances on their own, so they value advisers who bring them peace of mind.
- “Helps me achieve my financial goals.” Clients in all four studies also valued advisers who can help them articulate their goals as well as support them along the way to finally achieve these goals. People tend to invest for a reason (not just to have more money but to have the money they need to live out their dreams), so advisers who can help bring clarity to these goals and help them come to fruition are valuable to investors.
- “Keeps me on track.” In three of four studies, we found behavioural coaching was one of the most valuable things to investors. Though investors may not like the “behavioural coaching” label specifically, they recognise the need for help managing their financial habits, and they value advisers who can help them do so.
- “Maximises my returns.” Though returns are often in the spotlight, we found only one study in which investors saw maximizing returns as a top value-add of advisers. Given the hidden nature of much of an adviser’s job, it’s not too surprising some investors may value something visible and measurable like returns.
Based on the evidence across the four studies, we created the “mind map” below to help advisers think about what clients value in their services. The size of each section of the mind map reflects how much evidence we found for each theme—the larger the section, the more evidence to support it.
Though all these concerns are worth addressing, keep in mind how much weight should be given to each concern based on the evidence. For example, though returns may show up in the mind map (they’re in the lower right corner), this section’s size compared with the other three values indicates it should receive less attention. Advisers may be better served by focusing on values that take up more space, such as “provides comfort by having the skills I don’t have to reach my goals.”
Mind Map of How Investors Think About Advisers’ Value
How to Provide Clients the Value They’re Looking For
The next step is for advisers to use the findings in this mind map to demonstrate their value—especially when it comes to contributions that can be opaque to clients.
To that end, we recommend advisers keep the following in mind to show their value to clients:
Advisers should demonstrate their ability to tailor plans to clients’ needs. Investors are looking for advice they can rely on for their situation, but if they can’t see exactly how their needs and circumstances are considered, they may fear that they’re receiving cookie-cutter solutions. Therefore, advisers should find ways to pull back the curtain to show clients how your processes account for them as individuals. For example, when you present plans to clients, let them know the client-informed factors you accounted for, such as their risk tolerance, timelines for their financial goals, and so on. Clarity on how your advice relates to each client will build confidence in the advice you provide.
Advisers should highlight goals in their client interactions. Investors see goal achievement as integral to the value of an adviser, so advisers should bring goals to the forefront of each step of the financial planning process, not just during goal-setting conversations. For example: How should clients respond to new circumstances to get them to their goals? How should they view the market given their goal progression? By putting goals at the heart of interactions with clients, advisers can better demonstrate the unique value they bring.
Advisers should show (not tell) clients the benefit of behavioural coaching. Investors recognise advisers can help them make better decisions with their finances. Still, they can chafe at the concept of behavioural coaching when it’s not introduced properly because they don’t like the implication that they are prone to mistakes. Therefore, it’s necessary for advisers to thoroughly illustrate the value of behavioural coaching. For example, advisers may talk about how they serve as a sounding board for clients when they make decisions. This not only gives clients the sense of how an adviser adds value by supporting their decision-making, but also does so in a way that does not feel like a negative judgment on the client’s own abilities.
Advisers should address returns in a productive way. Some clients will inevitably see returns as a key value-add for advisers, so advisers must be prepared to help clients think about returns productively. One way to do so is to help clients set better expectations for returns by giving them a meaningful benchmark. For example, advisers may focus clients on benchmarks that track toward their goals instead of beating the market more generally. In doing so, advisers speak to the value that clients see in returns without catering to unrealistic expectations for maximum returns.
