Reasons to be Cheerful, Part 3 is one of my favorite Ian Dury songs. That came to mind when I reported on why I see a financial advisor this week.
It has always been a question in my mind as to why consumers choose to see a financial advisor.
What are the factors that motivate consumers to see a financial advisor, and what makes them “feel better” after meeting with an advisor?
While getting professional and unbiased advice is the obvious primary reason for seeing an advisor, it’s clear there’s more than that, according to new research we covered this week.
According to a Hymans Robertson study, one of the top reasons for consulting a financial advisor was ‘peace of mind’.
Before digging into this, it’s worth remembering that this study was only for wealthy clients with investments of £300,000 or more. Still, the findings have broader implications.
The question is, will the client come home from a meeting with their planner or advisor, sit in a comfortable armchair, and breathe a sigh of relief that they’ve met an expert and solved all their financial questions and problems? That’s it. Or is it more complicated than that? I think so.
Peace of mind can also be described as “a good night’s sleep.” Peace of mind that your loved ones are being looked after, your investments are in place, and your tax concerns are sorted out. various. Some of these things are purchased when you meet an advisor.
The big question is whether financial advisors can provide true peace of mind.
I suspect much of the success of financial advisors and planners is delivered by their advisors, but advisors reach out to their clients after annual reviews and meetings to ensure that they feel truly at ease. May I ask you to please be careful with their finances?
“Is everything covered?” “Do you have any more questions?” “Are you completely satisfied with my advice?” It’s a question you can ask. The best ones probably already do. Some people don’t.
“Peace of mind” sounds like a nebulous concept, but it was interesting to dig deeper into the survey to find out what kind of results clients actually want.
Here the results were more realistic.
When asked which aspects of advice investors consider most important, two-thirds (66%) of clients say investment return is “important” and just over two-fifths (44%) say tax is the most important. We believe there is value in efficiently managing Clients want results, not just peace of mind.
Clients accept low returns for a period of time, but an advisor who delivers low returns year after year is miserable. Even if it delivers “peace of mind”, it may not be enough.
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Kevin O’Donnell is the editor of Financial Planning Today and has worked as a journalist and editor for over 30 years.