New study shows client perceptions of their Advisors are changing amid pandemic, Advisors need to deepen relationships & demonstrate value to maintain client loyalty

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New investor research finds changing client mindset and confidence amid global crisis and the steps that advisors can take to demonstrate and reinforce their value using behavioral finance techniques.

“While there is much uncertainty in the world right now, advisors have an opportunity to support clients, deepen relationships and expand their capabilities to provide that certainty and confidence.” said Sean R. Walters, CAE, chief executive officer, Investments & Wealth Institute.

Investments & Wealth Institute released its 2020 Investor Research, conducted by Absolute Engagement, in partnership with Toews Corporation. This new investor research, fielded in March 2020, illuminates the changing client perceptions regarding their advisory relationship and outlines the steps that advisors can take to demonstrate and reinforce their value now and in the future. The research also focuses on expanding the Exceptional AdvisorTM Model to understand how advisors need to adjust their offer when working with different client segments.

Against a backdrop of an economic recession and a global pandemic, the research took a close look at investor behavior, satisfaction, loyalty, and confidence. The omnibus research is further examined through a collection of reports, including a special report released in April, The Current Crisis, the Impact on Client Loyalty, and the Implications for Your Business and a new behavioral finance report, Investor Behavior in a Market Crisis released concurrently.

The research revealed key gaps and opportunities:

  • Satisfaction among clients remains high, but this may be changing, with many respondents questioning their advisory relationship during the current crisis.
  • Four confidence gaps were identified that reflect how clients are feeling, rather than the service their advisor is providing. These confidence gaps highlight an opportunity for advisors to support clients in new and more valuable ways.
  • Six satisfaction gaps were identified through the study which may explain the looming loyalty crisis. Identifying these gaps helps advisors to prioritize their response by uncovering where clients feel they need to improve in the current environment.
  • The research highlights the critical importance of both ethics and expertise, and what clients expect from the professional designations that their advisors hold. Not surprisingly, investors place high value on the professional designations in the decision to hire their advisor, and new data shows investors put additional importance on multiple designations.
  • The research examined differences in needs and preferences across segments. This report, however, highlighted the significant differences in the needs of clients based on how far they are from retirement. Further, it points to a significant opportunity to better meet the needs of clients who are 6-9 years from retirement. This segment is less satisfied overall and more represent a flight risk.

“There are current positives in the advisory industry, including the high satisfaction ratings that advisors continue to earn through their on-going work with clients,” said Julie Littlechild, Founder and CEO, Absolute Engagement. “At the same time, the data shows the risk that is created in times of uncertainty. The high-level metrics highlight that there may be a looming loyalty crisis and that advisors need to focus on demonstrating value for clients. At a time when advisors rightly believe they are working harder than ever to provide reassurance, this may feel like a daunting task, however, this is also a time of opportunity for advisors to provide a greater experience.”

While satisfaction remains high with 90 percent of respondents reporting they are somewhat or very satisfied with their advisory relationship, loyalty is in question. Many respondents are questioning their advisory relationship during this current crisis. Thirty-one percent of clients have considered changing advisors; this is up from 21 percent in 2019 and increases further to 44 percent in the period between March 15 – 24. This data suggests, as the economic and human crisis began to take hold, despite high satisfaction, an increasing number of clients questioned whether they should work with another advisor.

To tackle declining loyalty head-on, the data suggests advisors consider implementing strategies that expand upon the already proven and successful Exceptional Advisor Model.

“While there is much uncertainty in the world right now, advisors have an opportunity to support clients, deepen relationships and expand their capabilities to provide that certainty and confidence. Voluntary, advanced designations provide that expertise and skill,” said Sean R. Walters, CAE, chief executive officer, Investments & Wealth Institute.

To read the full report: http://www.iwicentral.org/2020InvestorResearch.

The Investments & Wealth Institute provides a variety of additional resources and education surrounding the Exceptional Advisor Model including the Exceptional Advisor Webinar Series, offered bi-weekly, and the Exceptional Advisor Podcast Series.

Drawing on the findings of this study since 2017, Investments & Wealth Institute created an online program Exceptional Advisor® Communicate Your Value and Build Client Engagement. Consisting of 5 modules, the program is designed to provide advisors a better understanding of what clients consider important, provide meaningful guidance, demonstrate advanced knowledge through credentials, and highlight a commitment to ethics. Consisting of webinars, videos, and readings, the program teaches advisors how to develop client communication and action plans. In addition, the Institute has developed an Exceptional Advisor® Toolkit, available to Institute members and CIMA®, CPWA®, and RMA® certificants. The toolkit provides an array of client and advisor resources.

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For Information:
For additional information, contact Devon Coquillard, communications manager, dcoquillard@i-w.org or (303) 850-3202.

The Exceptional Advisor® Model
The Exceptional Advisor® program is born out of research conducted by the Institute and AbsoluteEngagement.com. The research shows that clients value an advisor who demonstrates advanced capabilities, exceptional service, a personalized approach, and meaningful guidance. All this is built on the pillars of adherence to high ethical standards and expertise in the field. This model depicts the core competencies of an Exceptional Advisor.
The Exceptional Advisor® program is designed to showcase your expertise and create awareness of your advanced knowledge and certifications, by providing the tools you need to tell your story and help you demonstrate how you fulfill what clients want.

Methodology
The study was commissioned by the Investments & Wealth Institute and conducted by Absolute Engagement and included input from 1,178 respondents, via online survey, between March 10 and 24. This report focuses on the 751 respondents from the United States; Canadian results are being released separately. All respondents work with a financial advisor, make, or contribute to the financial decisions in the household and met defined investable asset criteria

About Investments & Wealth Institute®
Investments & Wealth Institute is a professional association, advanced education provider, and standards body for financial advisors, investment consultants, financial planners, and wealth managers who embrace excellence and ethics. Through our events, continuing education courses, publications, and acclaimed certifications—Certified Investment Management Analyst® (CIMA®), Certified Private Wealth Advisor® (CPWA®), and Retirement Management Advisor® (RMA®)—we deliver rigorous, highly practical education. The Institute is committed to improving the professionalism of its members through educational and certification programs. We support high standards of professional conduct and deliver Ivy League-quality education with real-world practical application to advance the advisory profession and provide better outcomes for the investing public. For more information, visit http://www.investmentsandwealth.org.

About Absolute Engagement
Absolute Engagement is an organization that prides itself on being an expert in elevating the client experience and helping advisors drive practice growth. Founder and Chief Executive Officer, Julie Littlechild, is a recognized expert on the drivers of client engagement and a popular speaker on how client experience is being disrupted and how to leverage those trends to drive referrals. Ms. Littlechild has presented at numerous Institute events, both in-person and online. She has worked with and studied successful financial advisors and their clients for more than twenty-five years. Previously, Ms. Littlechild launched and ran one of the industry’s leading research firms, focused on client engagement. She is the author of a popular blog, the co-host of the Becoming Referable podcast and the author of The Pursuit of Absolute Engagement. For more information, visit http://www.absoluteengagement.com.

About Toews
Toews Asset Management is an SEC-registered investment advisor founded in 1994. Most investors hope to avoid losses and realize growth. Toews builds portfolios that primarily seek to reduce risk of loss in crisis environments, as well as attempt to participate in market gains. Our process is not based on subjective or predictive methodology. It has used a heavily researched and price-reactive algorithm since 1996 that provides a signal for investment exit and re-entry points. For more information, visit http://www.toewscorp.com.

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