Adapting to Changing Client Perceptions: A Study by IWI

Denver, CO — June 17, 2020 — 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 Advisor^® 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.  

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.