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The Services Wealthy Clients Value the Most

Unbiased advice and expert investment knowledge rank high on the list of services that wealthy investors want from their financial advisers.

What are the services wealthy clients value most from financial advisers?

Unbiased advice and having the knowledge that an investor is lacking are the two things an adviser can provide that investors value most, according to a new 55-page report published by Spectrem Group.

“Keeps me from making bad investment decisions,” was the third most desirable service investors say they want from an adviser, the report said.

By contrast, the services investors say they don’t need to include are “budgeting” and “managing my money because I don’t want to.”

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One implication of this finding, according to Spectrem Group, is this: “Providing unbiased advice and having the knowledge that the client does not have are services and skills that would be beneficial for financial providers to highlight as services provided.”

The adviser type had a significant impact on the type of fee structure investors are charged, according to Spectrem Group. Seventy-three percent of investors who use an independent investment adviser have a fee based on assets under management, while 30% of investors who work with a full-service broker are charged commission fees.

And investment management, financial planning, investment performance monitoring, retirement planning, and asset allocation are the top five desired services to be included in fees, the report showed. Of note, 81% of investors receive financial planning from their adviser, and 70% of those investors did not have an additional charge for the plan.

According to Spectrem Group, “financial providers should include financial planning as part of their overall fees, as this is highly desired by investors.”

What do advisers say about these findings?

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"It is consistent with my experiences," said Leon LaBrecque, the chief growth officer of Sequoia Financial Group. “Unbiased advice is a critical piece,” he said. “In general, I think our clients value us for giving guidance on the unknown. As one client put it to me many years ago, ‘I hire you because you know what I don’t know. And since I don’t know what I don’t know, you’re essential.’ I liked that statement and have tried to live by it; trying to know as much as I can (or find someone else who does) about the whole dimensionality of money: taxes, estate planning, debt, investments, and maybe most important: how people think and feel.”

Others have a slightly different take. “I don’t disagree with the study, however, in our firm, the numbers are a bit different,” said Matt McKay, a certified financial planner with Briaud Financial Advisors. “In fact, the ‘managing my money because I don’t want to’ is one of the highest when we surveyed internally. Additionally, ‘navigating the financial changes’ is also high on the list.”

For his part, Sean Pearson, a certified financial planner with Ameriprise Financial Services, said each individual and family is unique and needs different conversations and personalized advice to achieve their unique goals and responsibilities. “In my experience working with clients, these findings align with what my clients value in working with me,” he said, while also noting some other areas that rise to the top of his list:

  • Asking important financial questions that clients may not think of on their own; 
  • Helping clients figure out the right question, before looking for the answer that suits their unique situation;
  • Taking a complex situation and creating a timeline to address each concern along the appropriate timeline;
  • Guiding people through difficult situations that often get put on the back burner; and
  • Sharing experiences from people who have come before them, from the perspective of someone who has helped dozens, or hundreds of people retire, pay for education, etc.

Other key themes and implications from the report:

Investors understand the fees they are being charged, contrary to popular industry belief. Some 72% of investors feel their fees are easy to understand. The easiest fee structure to understand is fees based on assets under management.

One implication of this theme according to Spectrem Group: “Financial providers that do not utilize a percentage fee structure based on assets under management (AUM) should adequately explain their fee structure and ensure client agreement.”

Investors who use advisers that charge commissions have a lower level of understanding of their fees compared to other investors. Only 30% of investors who are charged commissions feel their fees are easy to understand.

Spectrem Group also noted in its report that “clarity regarding fees is something that financial providers need to continue to strive towards, as half of investors are not very clear on what they pay in fees.” What’s more, they noted the following: “Explaining fee structure and documentation will help clarify for clients what they pay. Providing the correct documentation is also critical since over 20% of investors do not remember what, if any, documentation they received regarding fees.”

Fees also play a major role in the decision to, or not to, work with an adviser for millennials and Gen-X investors. Nearly two-thirds of millennials and over half of Gen-X investors indicate that fees played a major role in the decision to work or not work with an adviser, while only 35% of boomers and 31% of World War II investors feel the same.

Spectrem also reported that advisers should ensure that online offerings are robust, as millennial clients and prospects are far more likely to be transacting more frequently online to avoid fees.